IRS advised that a partner's unextended assessment period may support a converted item notice

Plain-English summary

The IRS advised that the Service may rely on a partner's unextended three-year period under IRC § 6501 to issue a converted item notice of deficiency. The advice states that IRC § 6229 does not create a separate assessment period. Instead, § 6229 provides a minimum period during which a partner's § 6501 period for partnership items will not expire. The memo cites Rhone Poulenc v. Commissioner and three circuit decisions as supporting this interpretation.

Ruling snapshot

• Question: May the IRS rely on a partner's unextended § 6501 period to issue a converted item notice of deficiency within three years after the partner filed its return?
• Outcome: Advice given
• Key authorities: IRC §§ 6229 and 6501; Rhone Poulenc v. Commissioner, 114 T.C. 533 (2000); AD Global (Fed. Cir.); Andantech v. Commissioner (D.C. Cir.); Curr-Spec v. Commissioner (5th Cir.).

Full text (IRS public release)

ID: CCA_2010051914533037 Number: 201025051
Release Date: 6/25/2010
Office: --------
UILC: 6229

From: --------------------
Sent: Wednesday, May 19, 2010 2:53:33 PM
To: --------------------
Cc: --------------------------------------
Subject: FW: 3-year period for assessment

We may rely on the partner's unextended section 6501 statute to issue a converted item notice of deficiency within three years of the date the partner filed its return. Rhone Poulenc v. Commissioner, 114 T.C. 533 (2000) held that section 6229 does not provide a separate period for assessment. Instead, it provides a minimum period during which no partner's section 6501 period will expire for partnership items. Three circuit courts of appeal have approved this interpretation: AD Global (Fed. Cir); Andantech v. Commissioner (D.C. Cir) and most recently, the 5th Circuit in Curr-Spec v. Commissioner.