Ezel / IRS Rulings / 200920049

CCA 200920049: A technical termination may not end a TEFRA small-partnership election

Number
200920049
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Exception for Small Partnerships
Topics
Procedure, penalties, and administration
Code sections
§ 703, § 708, § 6231
Ruling dated
April 7, 2009
Publicly released
May 15, 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 whether a partnership’s technical termination under section 708(a) ended its election not to be treated as a small partnership under the TEFRA rules. Section 708(a) applies a termination “for purposes of this subchapter,” meaning subchapter K, which governs the accounting of partnership items. Counsel noted that a termination might affect an accounting election under section 703(b), although another unidentified office would need to address that question. The section 6231(a)(1) election appears in a different subchapter, the TEFRA partnership-procedure rules in subchapter C of chapter 63. Counsel therefore advised that the TEFRA election may remain effective despite the technical termination.

Ruling snapshot

  • Question: Did a section 708 technical termination end the partnership’s election out of the small-partnership exception under section 6231(a)(1)?
  • Outcome: Advice given: the election may remain effective because section 708’s termination rule is limited to subchapter K.
  • Key authorities: IRC §§ 703(b), 708(a), 6231(a)(1).

Full text (IRS public release)

ID: CCA_2009040712315137 Number: 200920049
Release Date: 5/15/2009
Office: --------------
UILC: 6231.01-01

From: -------------------
Sent: Tuesday, April 07, 2009 12:31:53 PM
To: ------------------------------------------
Cc: ----------------------------------
Subject: RE: TEFRA election

Section 708(a) deems a partnership terminated "for purposes of this subchapter". "This subchapter" is subchapter K which governs the accounting of partnership items. Thus, while a termination might affect an accounting election under section 703(b) (----- would have to opine on this), a technical termination might not affect an election made under another subchapter such as the TEFRA subchapter C of Chapter

  1. So the election not to be treated as a small partnership under section 6231(a)(1) may still be
    effective, notwithstanding the technical termination.

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