Ezel / IRS Rulings / 201034020

CCA 201034020: Bankruptcy removes a grantor-beneficiary from a TEFRA proceeding

Number
201034020
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Items Cease to Be Partnership Items in Certain Cases
Topics
Procedure, penalties, and administration
Code sections
§ 6231
Ruling dated
July 28, 2010
Publicly released
August 27, 2010
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2010, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2010
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel Advice addressed a trust's role as the tax matters partner (TMP) during a bankruptcy. Under Rev. Rul. 2004-88, the advice stated that the trust could continue to act as TMP because it was not in bankruptcy. The husband grantor and beneficiary was in bankruptcy, so he personally automatically dropped out of the TEFRA proceeding. As a practical matter, only the non-bankrupt wife would be subject to tax based on the TEFRA proceeding.

Ruling snapshot

  • Question: May a trust continue to act as tax matters partner when a grantor-beneficiary is in bankruptcy?
  • Outcome: Advice given
  • Key authorities: IRC § 6231; Rev. Rul. 2004-88

Full text (IRS public release)

ID: CCA_2010072808303937 Number: 201034020
Release Date: 8/27/2010
Office: ---------
UILC: 6231.13-00

From: --------------------
Sent: Wednesday, July 28, 2010 8:30:42 AM
To: ----------------------
Cc: ------------
Subject: RE: TMP in bankruptcy

Under Rev. Rule 2004-88, the trust can continue to act as TMP since it is not in bankruptcy.

Since the husband grantor/beneficiary is bankrupt, you are correct that he personally automatically drops
out of the TEFRA proceeding.

As a practical matter, only the non-bankrupt wife will be subject to tax based on the TEFRA proceeding.
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