CCA 201042035: Disclosure failure does not automatically extend every partner's assessment period

Plain-English summary

Chief Counsel Advice considered whether a TEFRA partnership's failure to disclose participation in a listed transaction automatically extended the assessment period for every partner. It concluded that the extension under IRC § 6501(c)(10) applies to a partner who was required to disclose the participation and failed to do so. The period is specific to each taxpayer, so the entity's failure does not automatically extend the period for all partners. The advice also explained that IRC § 6229(a) extends each partner's IRC § 6501 period, and that the § 6229 extension is unnecessary if the indirect partner's § 6501 period is otherwise open.

Ruling snapshot

• Question: Does a TEFRA partnership's failure to disclose a listed transaction automatically extend the assessment period for every partner?
• Outcome: Advice given
• Key authorities: IRC §§ 6011, 6229(a), and 6501(c)(10); Rhone-Poulenc v. Commissioner, 114 T.C. 533, 552 (1990)

Full text (IRS public release)

ID: CCA_2010100413071450 Number: 201042035
Release Date: 10/22/2010
Office: ----------------
UILC: 6501

From: -----------------------
Sent: Monday, October 04, 2010 1:07:15 PM
To: -------------------
Cc: --------------------
Subject: FW: TEFRA Question

The period of limitations on assessment is specific to each taxpayer and an entity's failure to disclose participation in a listed transaction in accordance with the section 6011 regulations does not automatically cause the extended period in section 6501(c)(10) to apply to all partners of the entity. Rather, section 6501(c)(10) applies to any partner in a TEFRA partnership who was required to disclose their participation in a listed transaction and failed to do so.

Also, section 6229 does cross-refence section 6501 because the period that is extended under section 6229(a) is each partner's section 6501 period. See Rhone-Poulenc v. Commissioner, 114 T.C. 533 at 552 (1990). If the period under section 6501 is otherwise open for the indirect partner, we don't need to rely on the section 6229 extension to assess the non-reporting partner.