CCA 201125031: An untimely AAR could not support a partnership loss carryforward

Plain-English summary

Chief Counsel Advice considered a corporate partner's loss carryforward that came from an untimely administrative adjustment request, rather than from an original Schedule K-1. The advice stated that the untimely request was a nullity. Because the corporate partner's return was inconsistent with the original Schedule K-1, the IRS could directly assess the inconsistently reported item under IRC § 6222 if the assessment period remained open. On the stated facts, the relevant assessment periods had expired for the amount at issue.

Ruling snapshot

• Question: Could the IRS directly assess a partnership item reported inconsistently with the original Schedule K-1 when the adjustment request supporting the reported loss was untimely?
• Outcome: Advice given.
• Key authorities: IRC § 6222.

Full text (IRS public release)

ID: CCA_2011052610394337 Number: 201125031
Release Date: 6/24/2011
Office: ---------
UILC: 6222.00-00

From: --------------------
Sent: Thursday, May 26, 2011 10:39:48 AM
To: --------------------
Cc: ------------------------------------------------------------------------------------ Subject: ------------- AARs

If I understand your facts correctly, the corporate partner reported a $------------loss carryforward on its originally filed ------- Form 1120. That loss carryforward derived from an untimely ------- AAR and not from a ------- original Schedule K-1. Since the ------- AAR was untimely, it was a nullity. Because the corporate partner filed inconsistently with the ------- original Schedule K-1 we can directly assess the inconsistently reported item under section 6222. But we can only do so if the period for assessment is open for -------. Under your facts it appears that all relevant periods for assessment have expired as to the $-----------.