CCA 201024062: Counsel advised against using Munro computations in a TEFRA scenario

Plain-English summary

The Office of Chief Counsel considered how to calculate a deficiency when a taxpayer reported a loss, a non-TEFRA adjustment created net income, and a TEFRA partnership proceeding was still pending. Counsel concluded that the IRS should not use the Munro computations under the described scenario. The memo explains that disregarding the partnership income could produce only a de minimis deficiency while affecting the IRS's ability to assess the non-TEFRA income later.

Ruling snapshot

• Question: Should the IRS use the Munro computations when a TEFRA proceeding and a non-TEFRA adjustment overlap?
• Outcome: Advice given
• Key authorities: IRC § 6231; TEFRA partnership procedures

Full text (IRS public release)

ID: CCA_2010051408592137 Number: 201024062
Release Date: 6/18/2010
Office: --------
UILC: 6231.00-00

From: --------------------
Sent: Friday, May 14, 2010 9:00:04 AM
To:
Cc:
Subject: RE: Possible munro situation

If the taxpayer reported a $ loss, and we have a $ + non-TEFRA adjustment we would determine a deficiency on approximately $ of net income.

If we if ignore the net income from the partnership (also about $ ), the starting "reported amount" would be a negative $ . This would result in a de minimus deficiency. When the TEFRA proceeding is over, we will likely only be able to asses additional partnership income and we will have forgone our ability to assess a deficiency on the $ of net non-TEFRA income.

So I agree that we should not use the Munro computations under this scenario.