Page 197 - 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
The rate of interest determined at the partner level is the modified underpayment rate – the sum of the Federal short-term rate (determined monthly) plus 5 percentage points.
The reviewed year partner is required to take into account the pushed out adjustment in the partner’s taxable year that includes the date on which the partnership furnished the notice. This is not the reviewed year. This is the adjustment year in which the partner received the statement of adjustments. Different partners may report the adjustment in different taxable years.
The tax of the reviewed partner for the year in which the partner reports the adjustment in increased. The reviewed year partner’s tax is increased for the partner’s taxable year that includes the date of the statement. The actual tax liability payable for the reviewed year is not increased. The increase in tax liability for the adjustment year equals the sum of the adjustment amounts computed below. The adjustment amounts are the sum of A + B, where A and B are defined below:
A =
B =
The amount by which the reviewed year [the year under audit] partner’s tax would increase if the partner’s distributive share of the adjustment amounts were included for the partner’s taxable year that includes the end of the reviewed year
The amount by which the reviewed year partner’s tax would increase by reason of adjustment to tax attributes under Section 6225(b)(3) in years after that year of the partner and before the year of the date of the statement.
Section 6226(b) provides:
(b) Adjustments taken into account by partner. –
(1) Tax imposed in year of statement.– Each partner’s tax imposed by chapter 1 for the taxable year which includes the date the statement was furnished under subsection (a) shall be increased by the aggregate of the adjustment amounts determined under paragraph (2) for the taxable years referred to therein.
(2) Adjustment amounts. – The adjustment amounts determined under this paragraph are –
(A) in the case of the taxable year of the partner which includes the end of the reviewed year [the year under audit], the
© Terence Floyd Cuff and Jerald David August, 2016
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