Page 64 - The TEFRA Partnership Audit Rules Repeal:

Partnership Agreement Provisions (cont.)
Provisions on the Selection and Removal of the Partnership Representative (cont.)
• The partnership agreement should discuss funding of the judicial action, including tax payments that are required for courts to have jurisdiction. The partnership agreement also should discuss what happens with the money if the partnership prevails.
• The partnership agreement also might address allocation of the assessment among partners and the charge to capital accounts. How do you allocate assessment among partners? How do you ensure that the correct partners bear the burden of partnership adjustments?
• The partnership may want to allocate the capital account adjustment to those partners who received the benefit of the earlier underpayment. This requires a sensible formula that apportions the earlier underpayment among the partners, presumably based on calculating a notional underpayment amount for each partner based on the earlier mistake.
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