CCA 201013049: IRS explains penalty assertions in a notice of adjustment

Plain-English summary

Chief Counsel advice addressed what should be asserted in a notice of adjustment under IRC § 6234. It said the notice should assert the adjustments and the applicability of the 20% or 40% penalty. It also concluded that the notice could not quantify a deficiency or penalty based on a hypothetical deficiency. Those amounts would instead be quantified in a later computational adjustment or affected-item notice of deficiency under section 6234(g).

Ruling snapshot

• Question: What adjustments and penalties may be asserted in a notice of adjustment based on a hypothetical deficiency?
• Outcome: Advice given
• Key authorities: IRC §§ 6234 and 6234(g); IRC § 6110(k)(3) not-precedent notice

Full text (IRS public release)

ID: CCA_2010030310151537 Number: 201013049
Release Date: 4/2/2010
Office: ----------
UILC: 6230.00-00; 6234-00

From: -------------------
Sent: Wednesday, March 03, 2010 10:15:22 AM
To: -------------------
Cc: ----------------------------------
Subject: RE: Advice

In the Notice of Adjustment under section 6234 you should assert the adjustments and the applicability of the 20 or 40 percent penalty. But you will not be able to quantify a deficiency or any penalty based on a hypothetical deficiency. Those amounts will be quantified as part of any later computational adjustment or affected item notice of deficiency under section 6234(g).