CCA 200908035: Each year's partnership depreciation required its own FPAA

Plain-English summary

Chief Counsel considered how to disallow depreciation deductions claimed on partnership returns for multiple years. The email said the deductions were partnership-level items, not computational adjustments. Because each partnership year was a separate cause of action, the IRS had to issue a final partnership administrative adjustment for each closed year. Disallowing the deductions at the partnership level would then reduce the partners' passive-loss carryovers into their open years.

Ruling snapshot

• Question: Could partnership depreciation be disallowed as a computational adjustment without a separate FPAA for each year?
• Outcome: Advice given: no, the IRS needed an FPAA for every affected partnership year.
• Key authorities: IRC § 6221 and the TEFRA partnership-level proceeding rules.

Full text (IRS public release)

ID: CCA_2008111710542037 Number: 200908035
Release Date: 2/20/2009
Office: -------------
UILC: 6221.00-00

From: --------------------
Sent: Monday, November 17, 2008 10:54:22 AM
To: --------------------
Cc: ------------------------------------------------------------ Subject: RE: question

The partnership depreciation deduction in -----------------is not a computational adjustment since the deduction was claimed at the partnership level in each of these years. Deductions claimed on a partnership return can only be disallowed through through an FPAA issued for that year - each partnership year is a separate cause of action. Consequently, we will need to issue an FPAA for each of these closed years to disallow the partnership depreciation deduction claimed by the partnership. This, in turn, will reduce the partners' passive loss carryover to the partners' open years.