Page 24 - Partnership Audit Rules - Drafting Partnership Agreements: The New Partnership Representative And The Outgoing Tax Matters Partner

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It is not clear whether these princi- ples apply to terminate the authority of the partnership representative.
Conclusion
A future article will cover other parts of the partnership audit rules and their intersection with contribu- tions, distributions, sales and merg- ers, and other areas effected by the rules.
While the BBA is receiving by far the most attention by tax commentators, Treasury, and the Service, it should not be overlooked that TEFRA is still the “game” for a few more years.
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The most profound change in the BBA provides a default rule that in the event of adjustments made by the IRS in an audit that increase the partnership’s taxable income or re- duce the amount of a previously re- ported loss with respect to a re- viewed year, the partnership will be responsible for any resulting im- puted underpayment.
What is an awkward, if not troubling, feature of the new rules is that in many instances the partners paying
the taxes for the adjustment year may not be the same partners that enjoyed the benefit from the prior underreporting of partnership in- come.
In a profound and significant depar- ture, the partnership representative does not have to be a partner.
The partnership representative pre- sumably has the normal fiduciary duties of loyalty and care.
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Corporate Taxation