Ezel / IRS Rulings / 200907033

CCA 200907033: Source partnership adjustments flow through partnership tiers

Number
200907033
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Computational Adjustment
Topics
Procedure, penalties, and administration
Code sections
§ 6231
Ruling dated
January 26, 2009
Publicly released
February 13, 2009
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advised that the IRS should not issue a final partnership administrative adjustment to a tier partnership when the adjustment originated in another source partnership. The source partnership receives the notice, including delivery to any partners that are themselves partnerships. The adjustment then flows through the tiers for assessment against the ultimate indirect partners under section 6231(a)(6). A tier partnership would receive its own separate notice only for items that originated independently at that tier.

Ruling snapshot

  • Question: Should the IRS issue a separate final partnership administrative adjustment to a tier partnership for an adjustment originating in another partnership?
  • Outcome: Advice given: no, the source partnership receives the notice and the adjustment flows through to indirect partners.
  • Key authorities: IRC § 6231(a)(6); Sente v. Commissioner, 95 T.C. 243 (1990).

Full text (IRS public release)

ID: CCA_2009012610394737 Number: 200907033
Release Date: 2/13/2009
Office: --------------
UILC: 6231.06-00

From: -------------------
Sent: Monday, January 26, 2009 10:39:48 AM
To: --------------------
Cc: -----------
Subject: RE: FPAA

We don't issue FPAA's to tier partnerships if the adjustment originates in another "source" partnership. We only issue an FPAA for the source partnership to all of its partners (including its partnership partners). See Sente v. Commissioner, 95 T.C. 243 (1990). The adjustments flow through the tiers to be assessed against the ultimate "indirect" partners. See last sentence of section 6231(a)(6)(last sentence).

We could only issue a tier partnership its own independent FPAA for items separately originating only at that level. That type of FPAA would look like any other, although we could include a disclaimer that, if the tier has interests in other TEFRA partnerships, items from those partnerships would be determined is separate proceedings for those partnerships.

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