Page 196 - 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
statement is furnished (as well as the date of the statement) is the date the statement is mailed, for this purpose.
Section 6226(a) provides:
(a) In general. – If the partnership –
 (i) not later than 45 days after the date of the notice of final partnership adjustment, elects the application of this section with respect to an imputed underpayment, and
 (2) at such time and in such manner as the Secretary may provide, furnishes to each partner of the partnership for the reviewed year [the year under audit] and to the Secretary a statement of the partner’s share of any adjustment to income, gain, loss, deduction, or credit (as determined in the notice of final partnership adjustment),
section 6225 shall not apply with respect to such underpayment and each such partner shall take such adjustment into account as provided in subsection (b). The election under paragraph (1) shall be made in such manner as the Secretary may provide and, once made, shall be revocable only with the consent of the Secretary.”
b. Increase in Tax of Reviewed Year Partner for Adjustment Year.
The push out election will result in increased taxability of the reviewed year partners [the partners for the year under audit]. The tax liability of the reviewed year partners is increased for the taxable year of the partner that includes the date the statement of adjustments was furnished. It is not clear whether this represents the year in which the statement was received by the partner or the year in which the partner received the statement.
Penalties, additions to tax, and additional amounts are determined at the partnership level.109 Each reviewed year partner is liable for its share of the penalty, addition to tax, and additional amount.110
Interest on the adjustment is determined at the partner level.111 Interest runs from the due date of the partner’s return for the taxable year to which the increase is attributable. Interest takes into account any increases in tax liability attributable to a change in tax attributes for an intervening tax year.
109 I.R.C. §§ 6221, 6226(c). 110 I.R.C. § 6226(c).
111 I.R.C. § 6226(c)(2).
© Terence Floyd Cuff and Jerald David August, 2016
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