Ezel / IRS Rulings / 201303012

TEFRA treatment depends on the partnership’s status and the method of proof

Number
201303012
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Partnerships
Topics
Procedure, penalties, and administration
Code sections
§ 6231, § 6233
Ruling dated
November 28, 2012
Publicly released
January 18, 2013
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2013, 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 2013
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 is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, 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 advised that a sham partnership that files no partnership return is not subject to TEFRA because it does not meet the partnership definition. A legitimate partnership with a trust as a pass-through partner is subject to TEFRA. The issuance of a deficiency notice based on an indirect method of proof, such as bank deposits or net worth, converts the partnership items and removes the partner from the TEFRA provisions.

Ruling snapshot

  • Question: When do a partnership’s circumstances affect TEFRA treatment?
  • Outcome: Advice given.
  • Key authorities: IRC §§ 6231(a)(1) and 6233; Treas. Reg. § 301.6231(c)-6.

Full text (IRS public release)

ID: CCA_2012112812183137 Number: 201303012
Release Date: 1/18/2013
Office: ----------
UILC: 6231.01-00

From: -------------------
Sent: Wednesday, November 28, 2012 12:18:47 PM
To: ---------------
Cc: -----------
Subject: RE: TEFRA Question

A sham partnership is not subject to TEFRA if it does not file a partnership return because it does not
meet the partnership definition. I.R.C. 6231(a)(1) and 6233; see the Culbertson and Tower Supreme
Court cases.

A legitimate partnership that has a trust as a pass-thru partner is subject to the TEFRA provisions. See
Rev. Rul 2004-88; Primco v. Commissioner.

The issuance of a notice of deficiency based on an indirect method of proof (such as bank deposits or net
worth) converts the partnership items and takes the partner out of the TEFRA provisions. Treas. Reg.
301.6231(c)-6.

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