Ezel / IRS Rulings / 200952050

CCA 200952050: Recharacterizing a TEFRA partnership distribution as wages requires an FPAA

Number
200952050
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Partnership Item
Topics
Procedure, penalties, and administration
Code sections
§ 6225, § 6231
Ruling dated
December 4, 2009
Publicly released
December 25, 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.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
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

Chief Counsel Advice addresses a proposed recharacterization of a distribution from a TEFRA partnership to S corporation shareholders as wages. The advice states that if the Service intends to disregard the distribution and treat the transfer as wages, it must issue a final partnership administrative adjustment. An assessment without that FPAA would be invalid under the cited Treasury regulation and IRC section 6225(a).

Ruling snapshot

  • Question: Must the Service issue an FPAA before treating a TEFRA partnership distribution as wages paid to S corporation shareholders?
  • Outcome: Advice given
  • Key authorities: IRC §§ 6225(a) and 6231(a)(3); Treas. Reg. § 301.6231(a)(3)-1(c)(3)

Full text (IRS public release)

ID: CCA_2009120416394754 Number: 200952050
Release Date: 12/24/2009
Office: --------------
UILC: 6231.03-00

From: --------------------------
Sent: Friday, December 04, 2009 4:39:49 PM
To: --------------------------------------
Cc: ---------------------------------------
Subject: RE: TEFRA and Employment Tax Audits

If the Service intends to disregard the partnership distribution and characterize the transfer of money from the TEFRA partnership to the S corporation shareholders as wages paid to the S corporation shareholders, then the Service must issue an FPAA. Treas. Reg. 301.6231(a)(3)-1(c)(3). Any assessment of a deficiency on this ground without an FPAA would be invalid. I.R.C. 6225(a).

--------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------

What does the Code say today, for your facts?

This advice was written for IRS staff and cannot be cited. Ezel checks the current Internal Revenue Code and IRS guidance against your situation, with citations.

Opens in Ezel Pro.

  • Checks the law as it stands today, not only this page
  • Cites every source it relies on, so you can verify it
  • Chat, drafting and research in one workspace