CCA 200910049: A missing K-1 dividend entry could be corrected as a clerical error

Plain-English summary

Chief Counsel advised reviewing the entire partnership return rather than only the partner's Schedule K-1. If Form 1065B reported the agreed amount of ordinary dividends but the partnership omitted that item from the K-1, section 6241(b) allowed the IRS to assess the correct amount as a clerical error. No electing large partnership proceeding would be necessary in that situation.

Ruling snapshot

• Question: Did an ordinary-dividend omission from Schedule K-1 require an electing large partnership proceeding?
• Outcome: Advice given: no, if Form 1065B reported the agreed amount, the IRS could correct the K-1 omission as a clerical error.
• Key authorities: IRC § 6241(b).

Full text (IRS public release)

ID: CCA_2009011612064937 Number: 200910049
Release Date: 3/6/2009
Office: -------------
UILC: 6241.00-00

From: --------------------
Sent: Friday, January 16, 2009 12:06:52 PM
To: --------------------
Cc: -------------------------------
Subject: RE: Partnership Question

You will have to look at the rest of the partnership return, not just at the Schedule K-1 discussed below. If the partnership return reflects ordinary dividends, but neglected to properly report this item on the partner's Schedule K-1, then section 6241(b) allows us to assess the correct amount as a clerical error. No electing large partnership proceeding would be necessary since we apparently agree with the amount of ordinary dividends reported in the body of the Form 1065B.