Ezel / IRS Rulings / 201418052

Confirm pass-through status in partnership analysis

Number
201418052
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Tax Matters Partner
Topics
Procedure, penalties, and administration
Code sections
§ 6231, § 7701
Ruling dated
April 16, 2014
Publicly released
May 2, 2014
Source
View Official PDF

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This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2014, 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 2014
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 agreed with a memorandum subject to several edits. It advised calling Form 1065 an information return or partnership return, not a partnership tax return. It also advised confirming that an LLC partner was actually a pass-through entity because the check-the-box regulations under § 7701 permit an LLC to elect corporate status. The memorandum could rely on the partner classification reported on Schedule K-1 and should state that status clearly.

Ruling snapshot

  • Question: What corrections were needed in a memorandum involving a partnership and an LLC partner?
  • Outcome: Advice given to correct terminology and verify the LLC's pass-through classification
  • Key authorities: IRC §§ 6231 and 7701; Form 1065; Schedule K-1

Full text (IRS public release)

ID: CCA_2014041614151266 Third Party Communication: None

UILC: 6231.07-00 Date of Communication: Not Applicable

Number: 201418052
Release Date: 5/2/2014
From:
Sent: Wednesday, April 16, 2014 2:15:12 PM
To:
Cc:
Bcc:
Subject: RE: Request for Assistance -- -----------------------

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We agree with your memorandum. We have a few comments:

(1) In the first full paragraph on the second page, the memo repeats the phrase "pursuant to the" twice. Delete the repetitive phrase. (2) The Form 1065 should not be referred to as a "Partnership tax return." The 1065 is not a tax return - it is an information return. Thus, it should be referred to as the Form 1065 or the partnership return. (3) We assume that the LLC partner is a pass-thru entity. Under section 7701 check-the-box regulations, however, it could have elected C corp status. The Form K-1 on the partnership return probably characterizes the partner as a partnership (Box I or J) and you can rely on that form to conclude that the entity is a pass-thru entity. Please edit your memorandum to clarify that the LLC is actually a pass-thru entity.

If you have any questions, please let me know.

Thanks,

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