Page 129 - 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
partnership must include with its election (in the manner prescribed by the Secretary) a disclosure of:
 the name and
 taxpayer identification number
of each person with respect to whom the S corporation must furnish a K-1 statement under Section 6037(b) for the S corporation’s taxable year ending with or within the partnership’s taxable year for which the election is made.
The Subchapter S disclosure requirement is met if the partnership discloses the name and taxpayer identification number of each S corporation shareholder with respect to which Schedule K-1 is required to be furnished under Section 6037(b). These statements are treated as statements required to be furnished by the partnership for purposes of the 100-or-fewer-statements criterion for the partnership’s eligibility to elect out.
The GENERAL EXPLANATION OF TAX LEGISLATION ENACTED IN 2015 (JCS-1-16, March 2016) contains this example:
For example, if a partnership has 50 partners, 49 of which are individuals and one of which is an S corporation with 30 shareholders all of whom are individuals, the partnership is treated as being required to furnish 80 statements. This is the sum of 49 statements for individual partners, one statement for the S corporation partner, and 30 statements for individuals with respect to whom the S corporation must furnish statements. The partnership meets the 100-or-fewer-statements criterion for the partnership’s eligibility to elect out.
iv. Treatmentofasinglememberentityor“defectiveentity”aspartofanelection out of the consolidated audit rules
The GENERAL EXPLANATION OF TAX LEGISLATION ENACTED IN 2015 (JCS-1-16, March 2016) suggests that a disregarded entity will not qualify as a qualifying partner under the election out rules, except as regulations may provide. A partner of a partnership is a disregarded entity owned by a C corporation. The partner might be a limited liability company. The GENERAL EXPLANATION OF TAX LEGISLATION ENACTED IN 2015 (JCS-1-16, March 2016) anticipates guidance under which the partnership can make the election out if the consolidated audit regime if the partnership can elect out with a disclosure of the name and taxpayer identification number of each of the disregarded entities and the corporation that is its sole member. Each corporation is taken into account as
© Terence Floyd Cuff and Jerald David August, 2016
60