CCA 1129036: At-risk limits are determined separately for each partner

Plain-English summary

Chief Counsel Advice addressed whether a TEFRA partnership case's schedule of adjustments reflected only partnership-level at-risk limits. The advice stated that the at-risk rules under IRC § 465 apply at the partner level, as held in the cited Tax Court cases. It agreed that each partner's limitation is separately determined, but said that this had already been accomplished when the taxpayer signed Part II of Form 870-LT. If the taxpayer did not intend to concede partner-level determinations, the advice stated that the taxpayer should not have signed that part of the form.

Ruling snapshot

• Question: Does the adjustment schedule reflect only partnership-level at-risk determinations, or were partner-level limits separately determined?
• Outcome: Advice given
• Key authorities: IRC §§ 465 and 6224; Form 870-LT, Part II; Hambrose Leasing v. Commissioner, 99 T.C. 298 (1992); Roberts v. Commissioner, 94 T.C. 853 (1990)

Full text (IRS public release)

ID: CCA_2011061311575437 Number: 201129036
Release Date: 7/22/2011
Office: ----------
UILC: 6224.01-01

From: -------------------
Sent: Monday, June 13, 2011 11:58:01 AM
To: -----------------
Cc: -----------
Subject: RE: TEFRA partner case

I would add that that the at risk provisions under section 465 are applied only at the partner level as held
by the courts in Hambrose Leasing v. Commissioner, 99 T.C. 298 (1992) and Roberts v. Commissioner,
94 T.C. 853 (1990). So taxpayer's counsel statement that the schedule of adjustments only reflects
partnership-level at risk would not be legally correct. He is correct that each partner's limitation is
separately determined, but that was in fact accomplished by taxpayer signing Part II of the Form 870-LT.
If taxpayer was not conceding partner-level determinations, he should not have signed Part II.