Ezel / IRS Rulings / 1221017
Chief Counsel Advice 1221017 Released May 25, 2012 Advice

CCA 1221017: Chief Counsel addresses a partner’s bad-debt deduction

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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 addressed when the worthlessness of a debt from a partner to a partnership should be determined. The advice said the issue would be decided in the partnership proceeding, not in a later partner proceeding. If the debt were ultimately found to exist and not be worthless, the IRS would have one year after the partnership proceeding to assess the partner's bad-debt deduction under IRC § 6229(d). The advice also said § 6229(f) did not apply on the stated facts.

Ruling snapshot

  • Question: In which proceeding should the worthlessness of a partner's debt to the partnership be determined, and when could an assessment follow?
  • Outcome: Advice given
  • Key authorities: IRC § 6229(d) and § 6229(f)

Full text (IRS public release)

ID: CCA_2012042408344137 Number: 201221017
Release Date: 5/25/2012
Office: ----------
UILC: 6231.03-00

From: -------------------
Sent: Tuesday, April 24, 2012 8:34:50 AM
To: --------------------
Cc: ----------------------------------
Subject: RE: TEFRA Question

Whether the debt from a partner to the partnership became worthless would be determined in the
partnership proceeding. Not a later partner proceeding.

Assuming that it is ultimately determined that debt exists and that it is not worthless, we would have one
year following the partnership proceeding to make the resulting assessment of the partner's bad debt
deduction under section 6229(d). Section 6229(f) has no application to your facts since you have not
stated any facts that would cause the partner's items to convert to nonpartnership items.

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