CCA 200932051: Inconsistent partner reporting could be assessed directly

Plain-English summary

Chief Counsel advice addressed section 704(c) allocations reported inconsistently by partners in a TEFRA case. The advice states that the allocations were partnership items, but a correct partnership Schedule K-1 would result in a “no change” determination for those items. Because the partners filed inconsistently with their Schedule K-1 attachments, the IRS could assess the resulting amounts directly under section 6222 or wait until the partnership proceeding ended and assess them with other TEFRA items.

Ruling snapshot

• Question: How could the IRS address section 704(c) allocations that partners reported inconsistently with their Schedule K-1 attachments?
• Outcome: Advice given
• Key authorities: IRC §§ 704(c) and 6222; Treas. Reg. § 301.6231(a)(3)-1

Full text (IRS public release)

ID: CCA_2009070108403037 Number: 200932051
Release Date: 8/7/2009
Office: --------------
UILC: 6222.00-00

From: -------------------
Sent: Wednesday, July 01, 2009 8:40:32 AM
To: --------------
Cc: --------------------------------
Subject: RE: 2007 proposed adjustment to TEFRA case -------------

Section 704(c) allocations are partnership items under Treas. Reg. 301.6231(a)(3)-1. So you can address them, but the determination would be a "no change" if the items are correctly reported on the attachments to the Schedules K-1. Since the partners filed inconsistently with thier Schedule K-1 (the attachment to the K-1 is deemed part of the K-1) we can directly assess now under section 6222. Or we can wait and assess once the partnership proceeding is complete along with any other items determined in the TEFRA proceeding.