TEFRA statute extensions had to be signed at the proper partner level

Plain-English summary

Chief Counsel advised that payments characterized at the partnership level could affect the taxability of the partners. The advice stated that a Form 872-P at the partnership level, or a Form 872-I at the partner level, would extend the assessment statute for the specified direct partners and the S corporation shareholder. It also explained that the shareholder, rather than the S corporation, had to sign the partner-level form, and that TEFRA generally did not apply to subtitle C issues.

Ruling snapshot

• Question: Which parties had to sign statute-extension forms when partnership-level payments affected partner taxability?
• Outcome: Advice given.
• Key authorities: IRC § 6229; Forms 872-P and 872-I.

Full text (IRS public release)

ID: CCA-102394-08 Number: 200938028
Release Date: 9/18/2009
Office: --------------
UILC: 6229.02-00

From: -------------------
Sent: Thursday, October 23, 2008 9:34 AM
To: ---------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
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Subject: RE: TEFRA partnership

It appears that you will be characterizing payments at the partnership level that will affect the taxability of the partners. To the extent that the partners are affected, only a Form 872-P at the partnership level, of a Form 872-i at the partner level, will extend the statute for assessing the three direct partners and the shareholder of the S corporation. The shareholder of the S corporation would have to sign the 872-i rather than the S corp. S corps pay no taxes and have no power to bind their shareholders. So there would be no point in getting the S corp to sign.

TEFRA generally does not apply to subtitle C issues. -----------------------
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