Ezel / IRS Rulings / 201012048

CCA 201012048: Section 704(d), not section 465, limits partnership losses by basis

Number
201012048
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Partnership Item
Topics
Procedure, penalties, and administration
Code sections
§ 465, § 704
Ruling dated
February 24, 2010
Publicly released
March 26, 2010
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 2010, 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 2010
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 distinguished the section 465 at-risk limitation from the section 704(d) basis limitation for partnerships. The advice stated that section 465 does not apply to partnerships, while section 704(d) does limit partnership losses to the amount of basis. It cautioned that agents sometimes conflate the two limitations, even though they are separate concepts.

Ruling snapshot

  • Question: Which loss limitation applies at the partnership level, the at-risk limitation or the basis limitation?
  • Outcome: Advice given
  • Key authorities: IRC §§ 465 and 704(d); Hambrose v. Commissioner, 99 T.C. 298 (1992)

Full text (IRS public release)

ID: CCA_2010022408482637 Number: 201012048
Release Date: 3/26/2010
Office: ----------
UILC: 6231.03-00

From: -------------------
Sent: Wednesday, February 24, 2010 8:48:29 AM
To: -----------------
Cc: --------------------------------
Subject: RE: TEFRA

Section 465 (at risk limitations) do not apply to partnerships. Hambrose v. Commissioner, 99 T.C. 298
(1992). Section 704(d) (limiting losses to amount of basis) does. Agents sometimes conflate or confuse
the two terms, but they are separate concepts with only basis limitations applying at the partnership level.

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