CCA 201105033: TEFRA proceeding required to determine whether a listed partner is a partner in fact

Plain-English summary

Chief Counsel advice considered whether a TEFRA partnership proceeding was required when one remaining listed partner might not be a partner in fact. The advice concluded that a TEFRA proceeding was required to make that determination. It stated that whether TEFRA procedures apply is generally determined from the partnership return at the beginning of the proceeding, and that listing a trust or disregarded entity as a partner automatically brings the partnership within the TEFRA procedures. The advice therefore treated the procedures as applicable even if the trust partner was ultimately disregarded.

Ruling snapshot

• Question: Do TEFRA partnership procedures apply when a trust or disregarded entity is listed as a partner but may not be a partner in fact?
• Outcome: Advice given.
• Key authorities: IRC §§ 6231(g) and 6233(b); Rev. Rul. 2004-88; Historic Boardwalk Hall LLC et al. v. Commissioner, 136 T.C. No. 1 (Jan. 3, 2011); Samuelli v. Commissioner, 2009 WL 1397177 (9th Cir. May 18, 2009).

Full text (IRS public release)

ID: CCA_2011010414110737 Number: 201105033
Release Date: 2/4/2011
Office: ----------
UILC: 6231.01-01

From: -------------------
Sent: Tuesday, January 04, 2011 2:11:14 PM
To: -----------------------
Cc: -------------------------------------------------
Subject: RE: 1 remaining partner, still a partnership-level proceeding?

A TEFRA partnership proceeding is required to determine that a listed partner is not a partner in fact. Historic Boardwalk Hall LLC et al. v. Commissioner; 136 T.C. No. 1; No. 11273-07 (Jan. 3, 2011).

The determination of whether the TEFRA procedures apply is generally determined based on the partnership return as of the beginning of the partnership proceeding. See Samuelli v. Commissioner 2009 WL 1397177 (9th Cir. May 18, 2009) (whether small partnership exception applies) and I.R.C. 6231(g)(reliance on partnership return to determine if TEFRA procedures apply). See also I.R.C. 6233(b)(if a partnership return is filed the determination that no partnership exists is determined in TEFRA proceeding). The listing of a trust or disregarded entity as a partner automatically makes the TEFRA partnership procedures apply. Rev. Rul. 2004-88.

Thus, even if the trust partner is ultimately disregarded, the TEFRA procedures apply to your case.