A listed partner's status must be determined in a TEFRA proceeding

Plain-English summary

Counsel advised that TEFRA procedures apply when a partnership lists a person as a partner and reports a contribution from that person. The person's status as a partner must be determined in a TEFRA proceeding, including under the alternative definition of partner in section 6231(a)(2)(B). Counsel also advised that whether a partnership exists between a listed partner and other partners must be determined under TEFRA procedures when a partnership return was filed.

Ruling snapshot

• Question: Must TEFRA procedures determine whether a person listed as a partner is actually a partner?
• Outcome: Advice given
• Key authorities: IRC §§ 6231 and 6233; Katz v. Commissioner; Blonien v. Commissioner

Full text (IRS public release)

ID: CCA_2009092114254137 Number: 200945063
Release Date: 11/6/2009
Office: ----------
UILC: 6231.02-00

From: -------------------
Sent: Monday, September 21, 2009 2:25:46 PM
To: ----------------------
Cc: ------------------------------------------------------
Subject: RE: Partnership item:

If the partnership reported him as a partner, and the partnership return reflects a contribution from him, TEFRA would apply to determine whether or not he is a partner. See Katz v. Commissioner (10th Cir) and Blonien v Commissioner (Tax Court) (if taxpayer is listed as a partner his status must be determined in TEFRA proceeding). Being listed as a partner also makes him a "partner" for TEFRA purposes under the alternative definition of a partner under section 6231(a)(2)(B). See also I.R.C. 6233(b)(whether partnership exists [e.g., between listed partner and other partners] must be determined under TEFRA procedures if a partnership return is filed).