Who may sign a TEFRA extension for a partnership with an LLC tax matters partner

Plain-English summary

Chief Counsel Advice addresses who may sign Form 872-P for a source partnership when its tax matters partner is an LLC taxed as a partnership. The advice states that the person with legal authority to act for the LLC under state law may sign for the LLC, whether that person is a member-manager or a nonmember-manager. That authority does not necessarily come from being the LLC’s own tax matters partner. The advice reconciles potentially different Internal Revenue Manual provisions and distinguishes an older 2002 NSAR from Revenue Ruling 2004-88.

Ruling snapshot

• Question: Who may sign Form 872-P for a partnership when its tax matters partner is an LLC with its own tax matters partner?
• Outcome: Advice given
• Key authorities: IRC §§ 6063 and 6229; Rev. Rul. 2004-88; IRM §§ 4.31.2.6.4(2) and 25.6.22.6.5.1(6)

Full text (IRS public release)

ID: CCA_2010090108574637 Number: 201039033
Release Date: 10/1/2010
Office: ----------
UILC: 6229.02-00

From: -------------------
Sent: Wednesday, September 01, 2010 8:57:48 AM
To: ----------------------
Cc: -----------
Subject: RE: Tefra contact?

Your analysis is correct. This is also covered in the Notice on Frequently Asked TEFRA questions. My
direct line is --------------if you need further clarification.

 Sorry to bother you, but I have what I believe to be a straightforward TEFRA issue that I was hoping

to double check with someone in ---------. Do you have a second to talk tomorrow (or is there someone in
your branch that you would recommend I call)?

 The issue is who signs the 872-P for the Source Partnership when the Source Partnership's TMP is an

LLC taxed as a partnership with its own tax matters partner ("TMP2").

  I look to the analysis of Rev. Rul. 2004-88 and I'm persuaded that the answer is whoever has legal

authority to act on behalf of LLC for state law purposes. If LLC has Mr. X as a member-manager, then Mr.
X can sign on behalf of LLC, the TMP of Source Partnership, even if Mr. X is not TMP2. Similarly, if Mr. X
is a nonmember-manager, he can still sign the 872-P for the Source Partnership on behalf of LLC, the TMP
of Source Partnership, even though Mr. X could not be TMP2. It may work out that TMP2 is the person with
legal authority to sign on behalf of LLC, the TMP of Source Partnership, but I wouldn't expect that authority
to flow from TMP2's status as tax matters partner of LLC.

 There is potentially some tension in the IRM on this point between 4.31.2.6.4(2) (which talks about

chasing through the tiers) and 25.6.22.6.5.1(6) (which seems to prefer the analysis of the Revenue Ruling),
but I think the provisions can be reconciled if 4.31.2.6.4(2) is viewed as assuming tiers of general
partnerships (without managers) and member-managed LLCs (again without managers). There is also an
old NSAR (2002 IRS NSAR 20244) which would have accepted TMP2's signature on the 872-P for the
Source Partnership, but the NSAR predates 2004-88 and seems consistent with a §6063 view.

    I hope all is well and thank you.




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