CCA 201033037: TEFRA proceedings would determine partnership debt items

Plain-English summary

Chief Counsel said Exam would have to conduct a TEFRA partnership proceeding for any year in which the partnership took excessive deductions. The proceeding would determine the amount, character, and allocation of partnership debt, including whether each partner guaranteed debt for that year. Those determinations would bind affected-item notices of deficiency limiting losses to basis or amounts at risk. The short email also says something was “probably unnecessary,” but does not identify that step; it left the decision to Exam.

Ruling snapshot

• Question: What partnership debt matters would a TEFRA proceeding determine for affected-item notices?
• Outcome: Advice given; Exam retained the decision.
• Key authorities: IRC § 6231

Full text (IRS public release)

ID: CCA_2010072113351537 Number: 201033037
Release Date: 8/20/2010
Office: ----------
UILC: 6231.05-00

From: -------------------
Sent: Wednesday, July 21, 2010 1:35:18 PM
To: --------------------
Cc: -------------------------------------
Subject: RE: TEFRA Question

That's up to Exam. But its probably unnecessary since we would have to conduct a TEFRA partnership proceeding for any year in which they took excessive deductions to determine the amount, character and allocation of partnership debt, and whether it was guaranteed by each respective partner in that year. These determinations would then be binding for purposes of generating any affected item notices of deficiency limiting loss to basis or at risk for that particular year.