Ezel / IRS Rulings / 200909054

CCA 200909054: Parent bankruptcy did not remove subsidiary partner from TEFRA case

Number
200909054
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Items Cease to Be Partnership Items in Certain Cases
Topics
Procedure, penalties, and administration
Code sections
§ 6231
Ruling dated
December 16, 2008
Publicly released
February 27, 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 considered a bankruptcy involving a corporate parent and subsidiaries in a TEFRA partnership proceeding. Assuming the subsidiary was the actual partner and the parent was treated as a partner only because it filed a consolidated return with that subsidiary, only the bankrupt parent converted out of the partnership proceeding. The subsidiary and other non-bankrupt subsidiaries in the consolidated group could still be assessed through the partnership proceeding. The FPAA should be sent to the subsidiary, with a copy to the parent, while an assessment against the bankrupt parent would require a converted-item notice of deficiency.

Ruling snapshot

  • Question: Does a parent's bankruptcy remove its subsidiary partner from a TEFRA partnership proceeding?
  • Outcome: Advice given: only the bankrupt parent converts out; the actual subsidiary partner remains in the proceeding.
  • Key authorities: IRC § 6231(a)(2)(B).

Full text (IRS public release)

ID: CCA_2008121613245937 Number: 200909054
Release Date: 2/27/2009
Office: --------------
UILC: 6231.13-00

From: -------------------
Sent: Tuesday, December 16, 2008 1:25:09 PM
To: --------------------
Cc: ------------------------------------
Subject: RE: Bankruptcy - Parents and Subs ---------

The answer is that only the bankrupt parent converts out of the TEFRA proceeding and the actual sub partner remains a party to the proceeding. This assumes that only the sub is the actual partner and that the parent was a "partner" under section 6231(a)(2)(B) only by virtue of filing a consolidated return with the actual partner. Only the sub and other non-bankrupt subs in the same consolidated filing group may be assessed based on the partnership proceeding. The FPAA should go to the sub with a copy still going to the parent which may remain the sub's agent even though the parent is not longer an actual party to the TEFRA proceeding.

We would need is issue a converted item notice of deficiency to the bankrupt parent if we want to assess it for the same items.

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