Ezel / IRS Rulings / 201432021

Converted partnership items must be assessed against the parent

Number
201432021
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Items Cease to Be Partnership Items in Certain Cases
Topics
Procedure, penalties, and administration
Code sections
§ 6231
Ruling dated
July 23, 2014
Publicly released
August 8, 2014
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 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 advised that a disregarded-entity partner and its parent are treated as the same taxpayer for income tax liability. The disregarded entity had no separate several liability because it was a flow-through entity. To assess partnership items that had converted to nonpartnership items, the IRS therefore had to send the notice of deficiency to the parent.

Ruling snapshot

  • Question: Who receives the deficiency notice when partnership items of a disregarded-entity partner convert and the parent is in bankruptcy?
  • Outcome: Advice given. The notice must be sent to the parent.
  • Key authorities: IRC § 6231

Full text (IRS public release)

ID: CCA_2014072311161101 [Third Party Communication:

UILC: 6231.13-00
Date of Communication: Month DD, YYYY]

Number: 201432021
Release Date: 8/8/2014
From:
Sent: Wednesday, July 23, 2014 11:16:11 AM
To:
Cc:

Bcc:
Subject: RE: Bankruptcy of Parent

The disregarded entity (DE) partner and the parent are treated as one and the same for income tax liability. The DE has no separate several liability because it is a flow-through entity. Thus, we can only assess the parent and other taxable subsidiaries.

Based on the above, we would have to send a converted item notice of deficiency to the parent in order to assess the converted partnership items.

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