CCA 201020017: Counsel addressed affected-item notices in a TEFRA partnership matter

Plain-English summary

In an internal Chief Counsel email concerning a TEFRA partnership matter, the sender explained the interaction among IRC §§ 6222, 6225, and 6230. The email states that § 6222 removes the restriction on assessment under § 6225, so an FPAA need not be issued at the source partnership level. It also states that § 6222 does not remove the restriction under § 6230(a)(2)(A)(i) or other applicable restrictions, and that an affected-item notice, and potentially an affected-item FPAA at a partner level that is itself a TEFRA partnership, may be required to disallow an affected-item deduction.

Ruling snapshot

• Question: When may the IRS need to issue an affected-item notice or FPAA in a TEFRA partnership matter?
• Outcome: Advice given
• Key authorities: IRC §§ 6222, 6225, and 6230(a)(2)(A)(i)

Full text (IRS public release)

ID: CCA_2010042010011937 Number: 201020017
Release Date: 5/21/2010
Office: ---------
UILC: 6222.03-00

From: --------------------
Sent: Tuesday, April 20, 2010 10:01:23 AM
To: --------------------
Cc: --------------------------------------------------
Subject: RE: Another TEFRA question ---------

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Section 6222 removes the restriction on assessment under section 6225. So we don't have to issue an FPAA at the source partnership level. But section 6222 does not remove the restriction on assessment under section 6230(a)(2)(A)(i) or other restrictions that may apply. Under this last provision, if the deduction is an affected item requiring partner level determinations we may have to issue an affected item notice to disallow the deduction as an affected item. Since the partner is itself a TEFRA partnership, we may have to issue an affected item FPAA at that level to make this determination.