CCA 200941024: TEFRA can apply when an entity files a partnership return

Number

200941024

Outcome

Advice

Document type

Chief Counsel Advice

IRS subject

Partnerships

Topics

Procedure, penalties, and administration

Code sections

§ 6031, § 6231, § 6233, § 6110

Ruling dated

August 31, 2009

Publicly released

October 9, 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.

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

This Chief Counsel advice explains when the TEFRA partnership rules apply. It states that TEFRA covers an entity required to file a U.S. partnership return or one that actually files such a return, unless the entity qualifies as a small partnership excluded from TEFRA. A partnership is not excluded as a small partnership if any partner is a flow-through entity, including a disregarded entity. The advice also notes that a partnership tax election does not by itself resolve the filing issues discussed.

Ruling snapshot

Question: When does TEFRA apply to an entity filing or required to file a partnership return?
Outcome: Advice given.
Key authorities: IRC §§ 6031, 6231, 6233, 6110(k)(3); Rev. Rul. 2004-88; Treas. Reg. § 1.6031(a)-1.

Full text (IRS public release)

ID: CCA_2009083110452837 Number: 200941024
Release Date: 10/9/2009
Office: --------------
UILC: 6231.01-00

From: -------------------
Sent: Monday, August 31, 2009 10:45:33 AM
To: --------------------
Cc: ------------------------------------------------
Subject: RE: TEFRA questions on ATAT case

TEFRA applies to any entity that is required to file a U.S. partnership return (IRC 6231(a)) or any entity that does, in fact, file a partnership return (IRC 6233) as long as the partnership does not qualify as a "small partnership" excluded from TEFRA under section 6231(a)(1)(B).

You are correct that a partnership does not qualify as a small partnership excluded from TEFRA if any partner is a flow through entity (including disregarded entity partners). Rev. Rul 2004-88.

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-------------------------------- Treas. Reg. 1.6031(a)-1 generally requires the filing of a Form 1065 if the entity has U.S. sourced or effectively connected income.

The election to be taxed as a partnership does not necessarily resolve any of the above issues.

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