CCA 201052006: Section 6229 provides a minimum period for partnership items, not a separate limitations period

Plain-English summary

Chief Counsel Advice addressed the assessment limitations periods for partnership items under the TEFRA rules. It states that section 6501 supplies the limitations period for the actual taxpayers, while section 6229 provides a minimum period during which a partner's section 6501 period cannot expire. A TMP can extend the period for all partners, or each partner can extend it separately with a Form 872 that references partnership items. The advice also states that a grantor trust that is not a taxpayer and appears to be disregarded generally has no reason to execute a separate agreement.

Ruling snapshot

• Question: How do sections 6501 and 6229 apply when assessing partnership items and extending the limitations period?
• Outcome: Advice given
• Key authorities: IRC §§ 6229 and 6501; Form 872

Full text (IRS public release)

ID: CCA-628842-10 Number: 201052006
Release Date: 12/30/2010
Office: --------------
UILC: 6229.00-00

From: -------------------
Sent: Mon 6/28/2010 8:42 AM
To: --------------------
Cc: ---------------------------------------------------------------------------------------------------------------------------
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Subject RE: TEFRA QUESTION

There is only one statute of limitations, section 6501, that runs from the date the actual taxpayer (husband and wife in this case) file a tax return. Section 6229 does not provide a separate statute of limitations for partnership items, but just provides a minimum period during which no partner's section 6501 statute can expire. The agent for the partners, the TMP, can extend the period for assessing tax attributable to partnership items for all partners. Alternatively, instead of acting through this agent, each separate partner can extend the statute for himself/herself/itself. Thus, if TEFRA applies, a TMP could extend the statute for the husband/wife, or they can do so for themselves using a Form 872 that specifically references partnership items as required by section 6229(b)(3). The current version of the Form 872 (rev. 2009) does this.

A grantor trust is not a taxpayer and probably does not file a tax return. Under your facts it appears to be a disregarded entity. So there seems to be no point in having it execute a separate agreement. If you have another 1 percent partner, you can get a Form 872 from that partner as well.