Page 159 - The TEFRA Partnership Audit Rules Repeal:

ALI CLE Live Video Webcast / “The TEFRA Partnership Audit Rules Repeal: Partnership and Partner Impacts” June 7, 2016, Jerald David August and Terence Floyd Cuff
Procedures for modification, the GENERAL EXPLANATION OF TAX LEGISLATION ENACTED IN 2015 (JCS-1-16, March 2016) tells us, will provide that the imputed under-payment excludes the portion of the underpayment taken into account by payment of tax included with amended returns of the reviewed year partners [partners in the year under audit]. The amended returns will relate to the taxable year of the partner that includes the end of the reviewed year of the partnership. The reviewed year partners must both (i) file amended returns including the adjustments and (ii) pay the appropriate tax on the revised income amounts.
The provision does not require that all partners file amended returns. The tax law adjusts the partnership underpayment on account of those partners who do file amended returns and pay the tax.
The amended return of the partner should report and take into account all adjustments in any item of income, gain, loss, deduction, or credit of the partnership (or any partner’s distributive share) properly allocable to the partner.
The partner’s amended return also should report and take into account changes for any other taxable year with respect to which any tax attribute is affected by reason of the adjustments.
Payment of any tax due is to be included with the amended return. This requirement perhaps will be modified in regulations. It would seem reasonable that the payment requirement should be treated as met once the tax is paid, regardless of whether the tax was paid with the partner’s amended return.
An adjustment may reallocate the distributive share of any item from one partner to another. This modification procedure then is available only if amended returns for the reviewed year [the year under audit] are filed by all partners affected by the adjustment.
Special rules will have to apply if the partner is itself a partnership or other pass-through entity.
j. Modification Procedures: Tax-exempt Partners.
Section 6225 and the GENERAL EXPLANATION OF TAX LEGISLATION ENACTED IN 2015 (JCS-1-16, March 2016) provide for modification of imputed underpayments on account of tax-exempt partners (who generally would not
© Terence Floyd Cuff and Jerald David August, 2016
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