Ezel / IRS Rulings / 1211017
Chief Counsel Advice 1211017 Released March 16, 2012 Advice

CCA 1211017: Bankruptcy ends a TMP's status but not an indirect partner's TEFRA proceeding

Apply this to your situation

This page covers one taxpayer's ruling from 2012, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2012
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It resolved one taxpayer's situation on its specific facts, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

Chief Counsel advice addresses the effect of a bankruptcy claim on a pass-through entity serving as a tax matters partner. The advice states that if a theoretical claim could be filed in a bankruptcy proceeding, the TMP items convert under Treas. Reg. § 301.6231(c)-7 and the entity's TMP status terminates under § 301.6231(a)(7)-1(l). It further states that indirect partners remain in the TEFRA proceeding, citing Third Dividend Dardanos in the Ninth Circuit. The result described is that the bankrupt agent leaves the proceeding, but the indirect partner does not.

Ruling snapshot

  • Question: Does a pass-through entity's bankruptcy remove its indirect partners from a TEFRA proceeding?
  • Outcome: Advice given.
  • Key authorities: IRC § 6231; Treas. Reg. §§ 301.6231(c)-7 and 301.6231(a)(7)-1(l); Third Dividend Dardanos (9th Cir.)

Full text (IRS public release)

ID: CCA_2012021416003237 Number: 201211017
Release Date: 3/16/2012
Office: ----------
UILC: 6231.07-00, 6231.14-00

From: -------------------
Sent: Tuesday, February 14, 2012 4:00:46 PM
To: -------------------
Cc: -----------------------------------------------------------
Subject: RE: Pass-Through Entity as TMP files for Bankruptcy ---------

Yes. If a theoretical claim could be filed in a bankruptcy proceeding the TMP items convert under treas.
Reg. 301.6231(c)-7and its status as TMP terminates under 301.6231(a)(7)-1(L), even if it is a pass-thru
entity. But its indirect partners stay in the TEFRA proceeding under Third Dividend Dardanos (9th Cir). In
other words, the bankruptcy of the agent through whom you hold your partnership interest takes your
agent out of the proceeding, but does not take you, an "indirect partner" out. Id.
\f

Get today's answer for your situation

You just read what the IRS ruled for one taxpayer in 2012, and it can't be cited as precedent. Ezel checks the current Internal Revenue Code and IRS guidance and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.