CCA 200910039: An IRA could serve as tax matters partner through its custodian

Number

200910039

Outcome

Advice

Document type

Chief Counsel Advice

IRS subject

Tax Matters Partner

Topics

Procedure, penalties, and administration

Code sections

§ 408, § 6231, § 7701

Ruling dated

January 9, 2009

Publicly released

March 6, 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.

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

An IRA is a trust, and its custodian acts as trustee for federal tax purposes. The IRA therefore is a person and a United States person under section 7701 and may be designated as tax matters partner, performing that role through the trustee. Even if it were not a United States person, the designation restriction applied only when an eligible United States person existed, and the partnership had no non-IRA partners. The designation on the partnership return was probably valid if the signer was an LLC member-manager or was authorized by one or more member-managers under the operating agreement.

Ruling snapshot

Question: Could an IRA be designated as tax matters partner, and could the return effect that designation?
Outcome: Advice given: yes, through its custodian, with a valid member-manager or authorized signature on the partnership return.
Key authorities: IRC §§ 408, 6231, and 7701(a); Treas. Reg. §§ 301.6231(a)(7)-1(b)(2) and 301.6231(a)(7)-2(b)(3).

Full text (IRS public release)

ID: CCA_2009010908430337 Number: 200910039
Release Date: 3/6/2009
Office: -------------
UILC: 6231.07-00

From: --------------------
Sent: Friday, January 09, 2009 8:43:06 AM
To: -------------------
Cc: ------------
Subject: RE: TEFRA questions

An IRA is a trust (see I.R.C. 408) and its custodian is a trustee for purposes of federal law. Thus, it is a "person" as defined under I.R.C. 7701(a)(1) and a "United States Person" under I.R.C. 7701(a)(30)(E). Thus, an IRA may be designated as Tax Matters Partner under Treas. Reg. Section 301.6231(a)(7)-1(b)(2). It would execute its TMP function through its trustee. Even if the IRA was not a United States person, the restriction under the forgoing regulation applies only if there is a United States person who is eligible. Under your facts, there are no non-IRA partners, so the restriction in question (limiting designations to U.S. persons) does not apply in any event.

I agree that the partnership has probably validly designated the TMP on the partnership return if the person signing the return is a "member-manager" as defined under Treas. Reg. 301.6231(a)(7)-2(b)(3) or is authorized by one of more member-managers to sign the return pursuant to the LLC operating agreement.

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