Partner bankruptcy does not bar signing for a nonbankrupt entity

Plain-English summary

Chief Counsel considered whether an indirect partner's bankruptcy affected that person's ability to sign a statute-of-limitations extension for an entity partner. The entity partner itself had not filed for bankruptcy. Because the individual would sign as the entity's representative rather than in an individual capacity, Counsel advised that the bankruptcy did not impair the authority to sign.

Ruling snapshot

• Question: May a bankrupt indirect partner sign a statute extension on behalf of a nonbankrupt entity partner?
• Outcome: Yes, because the signer acts as the entity's representative rather than in an individual capacity
• Key authorities: IRC § 6231

Full text (IRS public release)

ID: CCA_2016011208465807 [Third Party Communication:

UILC: 6231.13-06, 6231.07-00 Date of Communication: Month DD, YYYY]

Number: 201603029
Release Date: 1/15/2016
From:
Sent: Tuesday, January 12, 2016 8:46:58 AM
To:
Cc:
Bcc:
Subject: RE: TEFRA question

Hi -------,

I do not believe the indirect partner’s bankruptcy will have any effect on the indirect
partner’s ability to sign a statute extension on behalf of an entity-partner because the
entity-partner did not file for bankruptcy and the indirect partner is acting as a
representative of that entity and not in his individual capacity.

Please let me know if you have any further questions.

Thanks,

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