CCA 201016071: FPAAs may be issued to partners when barred-year items affect later open years

Plain-English summary

Chief Counsel Advice recommends issuing final partnership administrative adjustments to partners even when the statute has expired for the partnership year under examination in two situations. The first is when a partner may carry losses from the barred year forward to an open year. The second is when property distributed to a partner in the barred year may be sold in a later open year. The advice identifies Kligfeld v. Commissioner and G-1 Holdings v. Commissioner as supporting these scenarios.

Ruling snapshot

• Question: When may the IRS issue an FPAA to a partner for a partnership year whose statute has expired?
• Outcome: Advice given
• Key authorities: IRC § 6226; Kligfeld v. Commissioner; G-1 Holdings v. Commissioner

Full text (IRS public release)

ID: CCA_2010032316194637 Number: 201016071
Release Date: 4/23/2010
Office: ----------
UILC: 6226.03-00

From: -------------------
Sent: Tuesday, March 23, 2010 4:19:48 PM
To: --------------------
Cc: -----------
Subject: RE: TEFRA Issues on ------ related cases

I agree that we should issue FPAA's to partners with statutes that have expired for the partnership year under examination: (1) if there is any potential carryforward by these partners of losses from the barred examination year to an open year of the partner; or (2) if property is distributed to a partner in the barred year that may be sold by the partner in a later open year. The above two scenarios reflect the holdings of Kligfeld v. Commissioner and G-1 Holdings v. Commissioner, respectively.