CCA 200923035: Defunct partnership may designate a tax matters partner

Plain-English summary

Chief Counsel answered procedural questions about a partnership that had gone out of business and about tiered partnership proceedings. Even though the partnership's key case no longer existed, the partnership or the IRS could designate a tax matters partner under Chef's Choice v. Commissioner. That designee could sign an extension of the assessment period, or the IRS could seek extensions from the individual partners. The advice also says only one final partnership administrative adjustment may be issued to a tier partner, even if that partner invested in other partnerships or had its own issues requiring such an adjustment. The form of that adjustment would depend on the facts and circumstances.

Ruling snapshot

• Question: How could a defunct partnership extend the assessment period, and how many FPAAs could a tier partner receive?
• Outcome: Advice given, designate a tax matters partner or seek individual extensions, and issue only one FPAA to the tier partner
• Key authorities: IRC § 6231; Chef's Choice v. Commissioner

Full text (IRS public release)

ID: CCA_2008080410513351 Number: 200923035
Release Date: 6/5/2009
Office: ----------
UILC: 6231.07-00

From: -------------------
Sent: Monday, August 04, 2008 10:51:34 AM
To: --------------------
Cc: --------------------
Subject: FW: Counsel questions for New Orleans meeting ---------

Discussion as to who the TMP is when the key case no longer exists. Who will sign a statute extension if necessary? In this case, we are talking about a partnership that has gone out of business. We are auditing the partnership and need to secure an extension.

Under Chef's Choice v. Commissioner, the partnership or the IRS can still designate a TMP for the partnership. The designated TMP can then sign the statute extension. Alternatively, statute extensions can be sought from the individual partners.

Can we issue more than 1 FPAA in a in tiering situation? If not, specifically how do we do the FPAA? We want examples.

Only one FPAA can be issued to a tier partner, including situations where the tier partner has investments in additional partnerships and/or also has its own issues that require an FPAA. Unfortunately, we do not have specific examples of how to do the FPAA as it is going to depend on the facts and circumstances involved in each case.

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Please let me know if I can provide any additional information.