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[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2821 Introduced in House (IH)]

114th CONGRESS
  1st Session
                                H. R. 2821

To amend the Internal Revenue Code of 1986 to reform partnership audit 
                                 rules.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 18, 2015

 Mr. Renacci (for himself and Mr. Kind) introduced the following bill; 
         which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL

 
To amend the Internal Revenue Code of 1986 to reform partnership audit 
                                 rules.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Partnership Audit Simplification Act 
of 2015''.

SEC. 2. PARTNERSHIP AUDITS AND ADJUSTMENTS.

    (a) Repeal of TEFRA Partnership Audit Rules.--Chapter 63 of the 
Internal Revenue Code of 1986 is amended by striking subchapter C (and 
by striking the item relating to such subchapter in the table of 
subchapters for such chapter).
    (b) Repeal of Electing Large Partnership Rules.--
            (1) In general.--Subchapter K of chapter 1 of such Code is 
        amended by striking part IV (and by striking the item relating 
        to such part in the table of parts for such subchapter).
            (2) Assessment rules relating to electing large 
        partnerships.--Chapter 63 of such Code is amended by striking 
        subchapter D (and by striking the item relating to such 
        subchapter in the table of subchapters for such chapter).
    (c) Partnership Audit Reform.--
            (1) In general.--Chapter 63 of such Code, as amended by the 
        preceding provisions of this section, is amended by inserting 
        after subchapter B the following new subchapter:

               ``Subchapter C--Treatment of Partnerships

                          ``Part I--In General

                   ``Part II--Partnership Adjustments

                         ``Part III--Procedure

                ``Part IV--Definitions and Special Rules

                          ``PART I--IN GENERAL

``Sec. 6221. Determination at partnership level.
``Sec. 6222. Partner's return must be consistent with partnership 
                            return.
``Sec. 6223. Designation of partnership representative.

``SEC. 6221. DETERMINATION AT PARTNERSHIP LEVEL.

    ``(a) In General.--Items of income, gain, loss, deduction, or 
credit of a partnership for a partnership taxable year (and any 
partner's distributive share thereof) shall be audited, any tax 
attributable thereto shall be assessed and collected, and the 
applicability of any penalty, addition to tax, or additional amount 
which relates to an adjustment to any such item or share shall be 
determined, at the partnership level pursuant to this subchapter.
    ``(b) Election Out for Certain Partnerships With 100 or Fewer 
Partners.--This subchapter shall not apply with respect to any 
partnership for any taxable year if--
            ``(1) the partnership elects the application of this 
        subsection for such taxable year,
            ``(2) the partnership has 100 or fewer partners on the last 
        day of such taxable year,
            ``(3) each of the partners of such partnership is an 
        individual, a C corporation (other than a real estate 
        investment trust or a regulated investment company), any 
        foreign entity that would be treated as a C corporation were it 
        domestic, or an estate of a deceased partner,
            ``(4) the election--
                    ``(A) is made with a timely filed return for such 
                taxable year, and
                    ``(B) includes (in the manner prescribed by the 
                Secretary) a disclosure of the name and taxpayer 
                identification number of each partner of such 
                partnership, and
            ``(5) the partnership notifies each such partner of such 
        election in the manner prescribed by the Secretary.
For purposes of paragraph (4)(B), the Secretary may provide for 
alternative identification of any foreign partners.

``SEC. 6222. PARTNER'S RETURN MUST BE CONSISTENT WITH PARTNERSHIP 
              RETURN.

    ``(a) In General.--A partner of any partnership shall, on the 
partner's return, treat each item of income, gain, loss, deduction, or 
credit attributable to such partnership in a manner which is consistent 
with the treatment of such income, gain, loss, deduction, or credit on 
the partnership return.
    ``(b) Underpayment Due to Inconsistent Treatment Assessed as Math 
Error.--Any underpayment of tax by a partner by reason of failing to 
comply with the requirements of subsection (a) shall be assessed and 
collected in the same manner as if such underpayment were on account of 
a mathematical or clerical error appearing on the partner's return. 
Paragraph (2) of section 6213(b) shall not apply to any assessment of 
an underpayment referred to in the preceding sentence.
    ``(c) Addition to Tax for Failure To Comply With Section.--For 
addition to tax in the case of partner's disregard of the requirements 
of this section, see part II of subchapter A of chapter 68.

``SEC. 6223. PARTNERS BOUND BY ACTIONS OF PARTNERSHIP.

    ``(a) Designation of Partner.--Each partnership shall designate (in 
the manner prescribed by the Secretary) a partner (or other person) as 
the partnership representative who shall have the sole authority to act 
on behalf of the partnership under this subchapter. In any case in 
which such a designation is not in effect, the Secretary may select any 
partner as the partnership representative.
    ``(b) Binding Effect.--A partnership and all partners of such 
partnership shall be bound--
            ``(1) by actions taken under this subchapter by the 
        partnership, and
            ``(2) by any decision in a proceeding brought under this 
        subchapter.

                   ``PART II--PARTNERSHIP ADJUSTMENTS

``Sec. 6225. Partnership adjustment by Secretary.
``Sec. 6226. Administrative adjustment request by partnership.

``SEC. 6225. PARTNERSHIP ADJUSTMENT BY SECRETARY.

    ``(a) In General.--In the case of any adjustment by the Secretary 
in the amount of any item of income, gain, loss, deduction, or credit 
of a partnership, or any partner's distributive share thereof--
            ``(1) the partnership shall pay any imputed underpayment 
        with respect to such adjustment in the adjustment year as 
        provided in section 6232, and
            ``(2) any imputed overpayment shall be taken into account 
        by the partnership in the adjustment year as a reduction in 
        non-separately stated income or an increase in non-separately 
        stated loss (whichever is appropriate) under section 702(a)(8).
    ``(b) Determination of Imputed Underpayments and Overpayments.--For 
purposes of this subchapter--
            ``(1) In general.--Except as provided in subsection (c), 
        any imputed underpayment or imputed overpayment with respect to 
        any partnership adjustment for any reviewed year shall be 
        determined--
                    ``(A) by netting all adjustments of items of 
                income, gain, loss, or deduction and multiplying such 
                net amount by the highest rate of tax in effect for the 
                reviewed year under section 1 or 11,
                    ``(B) by treating any net increase or decrease in 
                loss under subparagraph (A) as a decrease or increase, 
                respectively, in income, and
                    ``(C) by taking into account any adjustments to 
                items of credit as an increase or decrease, as the case 
                may be, in the amount determined under subparagraph 
                (A).
            ``(2) Adjustments to distributive shares of partners not 
        netted.--In the case of any adjustment which reallocates the 
        distributive share of any item from one partner to another, 
        such adjustment shall be taken into account under paragraph (1) 
        by disregarding--
                    ``(A) any decrease in any item of income or gain, 
                and
                    ``(B) any increase in any item of deduction, loss, 
                or credit.
    ``(c) Modification of Imputed Underpayments.--
            ``(1) Method in general.--The Secretary shall establish 
        procedures under which the imputed underpayment amount may be 
        modified consistent with the requirements of this subsection.
            ``(2) Amended returns of partners.--Such procedures shall 
        provide that if--
                    ``(A) one or more partners file returns for the 
                taxable year of the partners which includes the end of 
                the reviewed year of the partnership,
                    ``(B) such returns take into account all 
                adjustments under subsection (a) properly allocable to 
                such partners (and for any other taxable year with 
                respect to which any tax attribute is affected by 
                reason of such adjustments), and
                    ``(C) payment of any tax due is included with such 
                return,
        then the imputed underpayment amount shall be determined 
        without regard to the portion of the adjustments so taken into 
        account.
            ``(3) Reallocation of distributive share.--In the case of 
        any adjustment which reallocates the distributive share of any 
        item from one partner to another, paragraph (2) shall apply 
        only if returns are filed by all partners affected by such 
        adjustment.
            ``(4) Year and day for submission to secretary.--Anything 
        required to be submitted pursuant to paragraph (1) shall be 
        submitted to the Secretary not later than the close the 270-day 
        period beginning on the date on which the notice of a proposed 
        partnership adjustment is mailed under section 6231 unless such 
        period is extended with the consent of the Secretary.
            ``(5) Decision of secretary.--Any modification of the 
        imputed underpayment amount under this subsection shall be made 
        only upon approval of such modification by the Secretary.
    ``(d) Definitions and Special Rule.--For purposes of this 
subchapter--
            ``(1) Reviewed year.--The term `reviewed year' means the 
        partnership taxable year to which the item being adjusted 
        relates.
            ``(2) Adjustment year.--The term `adjustment year' means 
        the partnership taxable year in which--
                    ``(A) in the case of an adjustment pursuant to the 
                decision of a court in a proceeding brought under 
                section 6234, such decision becomes final,
                    ``(B) in the case of an administrative adjustment 
                request under section 6226, such administrative 
                adjustment request is made, or
                    ``(C) in any other case, notice of the final 
                partnership adjustment is mailed under section 6231.

``SEC. 6226. ADMINISTRATIVE ADJUSTMENT REQUEST BY PARTNERSHIP.

    ``(a) In General.--A partnership may file a request for an 
administrative adjustment in the amount of any item of income, gain, 
loss, deduction, or credit of the partnership for any partnership 
taxable year, but only to the extent the adjustment results in an 
imputed underpayment.
    ``(b) Adjustment.--Any such adjustment under subsection (a) shall 
be determined and taken into account by the partnership under rules 
similar to the rules of section 6225 (other than subsection (c) 
thereof) for the partnership taxable year in which the administrative 
adjustment request is made.
    ``(c) Period of Limitations.--A partnership may not file such a 
request--
            ``(1) more than 3 years after the later of--
                    ``(A) the date on which the partnership return for 
                such year is filed, or
                    ``(B) the last day for filing the partnership 
                return for such year (determined without regard to 
                extensions), and
            ``(2) after any notice of an administrative proceeding with 
        respect to the taxable year is mailed under section 6231.

                         ``PART III--PROCEDURE

``Sec. 6231. Notice of proceedings and adjustment.
``Sec. 6232. Assessment, collection, and payment.
``Sec. 6233. Penalties and interest.
``Sec. 6234. Judicial review of partnership adjustment.
``Sec. 6235. Period of limitations on making adjustments.

``SEC. 6231. NOTICE OF PROCEEDINGS AND ADJUSTMENT.

    ``(a) In General.--The Secretary shall mail to the partnership and 
the partnership representative--
            ``(1) notice of any administrative proceeding initiated at 
        the partnership level with respect to an adjustment of any item 
        of income, gain, loss, deduction, or credit of a partnership 
        for a partnership taxable year, or any partner's distributive 
        share thereof,
            ``(2) notice of any proposed partnership adjustment 
        resulting from such proceeding, and
            ``(3) notice of any final partnership adjustment resulting 
        from such proceeding.
Any notice of a final partnership adjustment shall not be mailed 
earlier than 270 days after the date on which the notice of the 
proposed partnership adjustment is mailed. Such notices shall be 
sufficient if mailed to the last known address of the partnership 
representative or the partnership (even if the partnership has 
terminated its existence). The first sentence shall apply to any 
proceeding with respect to an administrative adjustment request filed 
by a partnership under section 6226.
    ``(b) Further Notices Restricted.--If the Secretary mails a notice 
of a final partnership adjustment to any partnership for any 
partnership taxable year and the partnership files a petition under 
section 6234 with respect to such notice, in the absence of a showing 
of fraud, malfeasance, or misrepresentation of a material fact, the 
Secretary shall not mail another such notice to such partnership with 
respect to such taxable year.
    ``(c) Authority To Rescind Notice With Partnership Consent.--The 
Secretary may, with the consent of the partnership, rescind any notice 
of a partnership adjustment mailed to such partnership. Any notice so 
rescinded shall not be treated as a notice of a partnership adjustment 
for purposes of this subchapter, and the taxpayer shall have no right 
to bring a proceeding under section 6234 with respect to such notice.

``SEC. 6232. ASSESSMENT, COLLECTION, AND PAYMENT.

    ``(a) In General.--Any imputed underpayment--
            ``(1) shall be assessed and collected in the same manner as 
        if it were a tax imposed for the adjustment year by subtitle A, 
        and
            ``(2) shall be paid on or before the partnership return due 
        date for the adjustment year.
    ``(b) Limitation on Assessment.--Except as otherwise provided in 
this chapter, no assessment of a deficiency may be made (and no levy or 
proceeding in any court for the collection of any amount resulting from 
such adjustment may be made, begun or prosecuted) before--
            ``(1) the close of the 90th day after the day on which a 
        notice of a final partnership adjustment was mailed, and
            ``(2) if a petition is filed under section 6234 with 
        respect to such notice, the decision of the court has become 
        final.
    ``(c) Premature Action May Be Enjoined.--Notwithstanding section 
7421(a), any action which violates subsection (b) may be enjoined in 
the proper court, including the Tax Court. The Tax Court shall have no 
jurisdiction to enjoin any action under this subsection unless a timely 
petition has been filed under section 6234 and then only in respect of 
the adjustments that are the subject of such petition.
    ``(d) Exceptions to Restrictions on Adjustments.--
            ``(1) Adjustments arising out of math or clerical errors.--
                    ``(A) In general.-- If the partnership is notified 
                that, on account of a mathematical or clerical error 
                appearing on the partnership return, an adjustment to a 
                item is required, rules similar to the rules of 
                paragraphs (1) and (2) of section 6213(b) shall apply 
                to such adjustment.
                    ``(B) Special rule.--If a partnership is a partner 
                in another partnership, any adjustment on account of 
                such partnership's failure to comply with the 
                requirements of section 6222(a) with respect to its 
                interest in such other partnership shall be treated as 
                an adjustment referred to in subparagraph (A), except 
                that paragraph (2) of section 6213(b) shall not apply 
                to such adjustment.
            ``(2) Partnership may waive restrictions.--The partnership 
        may at any time (whether or not any notice of partnership 
        adjustment has been issued), by a signed notice in writing 
        filed with the Secretary, waive the restrictions provided in 
        subsection (b) on the making of any partnership adjustment.
    ``(e) Limit Where No Proceeding Begun.--If no proceeding under 
section 6234 is begun with respect to any notice of a final partnership 
adjustment during the 90-day period described in subsection (b) 
thereof, the amount for which the partnership is liable under section 
6225 shall not exceed the amount determined in accordance with such 
notice.

``SEC. 6233. PENALTIES AND INTEREST.

    ``(a) Penalties and Interest Determined From Reviewed Year.--
            ``(1) In general.--In the case of an imputed underpayment 
        with respect to a partnership adjustment for a reviewed year, 
        the partnership--
                    ``(A) shall pay to the Secretary interest computed 
                under paragraph (2), and
                    ``(B) shall be liable for any penalty, addition to 
                tax, or additional amount as provided in paragraph (3).
            ``(2) Determination of amount of interest.--The interest 
        computed under this paragraph with respect to any partnership 
        adjustment is the interest which would be determined under 
        chapter 67--
                    ``(A) on the imputed underpayment determined with 
                respect to such adjustment,
                    ``(B) for the period beginning on the day after the 
                return due date for the reviewed year and ending on the 
                return due date for the adjustment year (or, if 
                earlier, the date payment of the imputed underpayment 
                is made).
        Proper adjustments in the amount determined under the preceding 
        sentence shall be made for adjustments required for partnership 
        taxable years after the reviewed year and before the adjustment 
        year by reason of such partnership adjustment.
            ``(3) Penalties.--A partnership shall be liable for any 
        penalty, addition to tax, or additional amount for which it 
        would have been liable if such partnership had been an 
        individual subject to tax under chapter 1 for the reviewed year 
        and the imputed underpayment were an actual underpayment (or 
        understatement) for such year.
    ``(b) Interest and Penalties With Respect to Adjustment Year 
Return.--
            ``(1) In general.--In the case of any failure to pay an 
        imputed underpayment on the date prescribed therefor, the 
        partnership shall be liable--
                    ``(A) for interest as determined under paragraph 
                (2), and
                    ``(B) for any penalty, addition to tax, or 
                additional amount as determined under paragraph (3).
            ``(2) Interest.--Interest determined under this paragraph 
        is the interest that would be determined by treating the 
        imputed underpayment as an underpayment of tax imposed in the 
        adjustment year.
            ``(3) Penalties.--Penalties, additions to tax, or 
        additional amounts determined under this paragraph are the 
        penalties, additions to tax, or additional amounts that would 
        be determined--
                    ``(A) by applying section 6651(a)(2) to such 
                failure to pay.
                    ``(B) by treating the imputed underpayment as an 
                underpayment of tax for purposes of part II of 
                subchapter A of chapter 68.

``SEC. 6234. JUDICIAL REVIEW OF PARTNERSHIP ADJUSTMENT.

    ``(a) In General.--Within 90 days after the date on which a notice 
of a final partnership adjustment is mailed under section 6231 with 
respect to any partnership taxable year, the partnership may file a 
petition for a readjustment for such taxable year with--
            ``(1) the Tax Court,
            ``(2) the district court of the United States for the 
        district in which the partnership's principal place of business 
        is located, or
            ``(3) the Claims Court.
    ``(b) Jurisdictional Requirement for Bringing Action in District 
Court or Claims Court.--
            ``(1) In general.--A readjustment petition under this 
        section may be filed in a district court of the United States 
        or the Claims Court only if the partnership filing the petition 
        deposits with the Secretary, on or before the date the petition 
        is filed, the amount of the imputed underpayment (as of the 
        date of the filing of the petition) if the partnership 
        adjustment was made as provided by the notice of final 
        partnership adjustment. The court may by order provide that the 
        jurisdictional requirements of this paragraph are satisfied 
        where there has been a good faith attempt to satisfy such 
        requirement and any shortfall of the amount required to be 
        deposited is timely corrected.
            ``(2) Interest payable.--Any amount deposited under 
        paragraph (1), while deposited, shall not be treated as a 
        payment of tax for purposes of this title (other than chapter 
        67).
    ``(c) Scope of Judicial Review.--A court with which a petition is 
filed in accordance with this section shall have jurisdiction to 
determine all items of income, gain, loss, deduction, or credit of the 
partnership for the partnership taxable year to which the notice of 
final partnership adjustment relates, the proper allocation of such 
items among the partners, and the applicability of any penalty, 
addition to tax, or additional amount for which the partnership may be 
liable under this subchapter.
    ``(d) Determination of Court Reviewable.--Any determination by a 
court under this section shall have the force and effect of a decision 
of the Tax Court or a final judgment or decree of the district court or 
the Claims Court, as the case may be, and shall be reviewable as such. 
The date of any such determination shall be treated as being the date 
of the court's order entering the decision.
    ``(e) Effect of Decision Dismissing Action.--If an action brought 
under this section is dismissed other than by reason of a rescission 
under section 6231(c), the decision of the court dismissing the action 
shall be considered as its decision that the notice of final 
partnership adjustment is correct, and an appropriate order shall be 
entered in the records of the court.

``SEC. 6235. PERIOD OF LIMITATIONS ON MAKING ADJUSTMENTS.

    ``(a) In General.--Except as otherwise provided in this section, no 
adjustment under this subpart for any partnership taxable year may be 
made after the later of--
            ``(1) the date which is 3 years after the latest of--
                    ``(A) the date on which the partnership return for 
                such taxable year was filed,
                    ``(B) the return due date for the taxable year, or
                    ``(C) the date on which the partnership filed an 
                administrative adjustment request with respect to such 
                year under section 6226, or
            ``(2) in the case of any modification of an imputed 
        underpayment under section 6225(c), the date that is 270 days 
        (plus the number of days of any extension consented to by the 
        Secretary under paragraph (4) thereof) after the date on which 
        everything required to be submitted to the Secretary pursuant 
        to such section is so submitted.
    ``(b) Extension by Agreement.--The period described in subsection 
(a) (including an extension period under this subsection) may be 
extended by an agreement entered into by the Secretary and the 
partnership before the expiration of such period.
    ``(c) Special Rule in Case of Fraud, etc.--
            ``(1) False return.--In the case of a false or fraudulent 
        partnership return with intent to evade tax, the adjustment may 
        be made at any time.
            ``(2) Substantial omission of income.--If any partnership 
        omits from gross income an amount properly includible therein 
        and such amount is described in section 6501(e)(1)(A), 
        subsection (a) shall be applied by substituting `6 years' for 
        `3 years'.
            ``(3) No return.--In the case of a failure by a partnership 
        to file a return for any taxable year, the adjustment may be 
        made at any time.
            ``(4) Return filed by secretary.--For purposes of this 
        section, a return executed by the Secretary under subsection 
        (b) of section 6020 on behalf of the partnership shall not be 
        treated as a return of the partnership.
    ``(d) Suspension When Secretary Mails Notice of Adjustment.--If 
notice of a final partnership adjustment with respect to any taxable 
year is mailed under section 6231, the running of the period specified 
in subsection (a) (as modified by the other provisions of this section) 
shall be suspended--
            ``(1) for the period during which an action may be brought 
        under section 6234 (and, if a petition is filed under such 
        section with respect to such notice, until the decision of the 
        court becomes final), and
            ``(2) for 1 year thereafter.

                ``PART IV--DEFINITIONS AND SPECIAL RULES

``Sec. 6241. Definitions and special rules.

``SEC. 6241. DEFINITIONS AND SPECIAL RULES.

    ``(a) Definitions and Special Rules.--For purposes of this 
subchapter--
            ``(1) Partnership.--The term `partnership' means any 
        partnership required to file a return under section 6031(a).
            ``(2) Partner.--The term `partner' means--
                    ``(A) a partner in the partnership, and
                    ``(B) any other person whose income tax liability 
                under subtitle A is determined in whole or in part by 
                taking into account directly or indirectly income, 
                gain, deduction, or loss of the partnership.
    ``(b) Partnership Adjustment.--The term `partnership adjustment' 
means any adjustment in the amount of any item of income, gain, loss, 
deduction, or credit of a partnership, or any partner's distributive 
share thereof.
    ``(c) Return Due Date.--The term `return due date' means, with 
respect to the taxable year, the date prescribed for filing the 
partnership return for such taxable year (determined without regard to 
extensions).
    ``(d) Joint and Several Liability.--
            ``(1) In general.--The partnership and any partner of the 
        partnership shall be jointly and severally liable for any 
        imputed underpayment and any penalty, addition to tax, or 
        additional amount attributable thereto.
            ``(2) Period for assessment of partners.--The period for 
        assessment of an imputed underpayment with respect to a partner 
        of a partnership shall not expire earlier than 3 years after 
        the date on which an assessment of such imputed underpayment 
        was made with respect to the partnership.
            ``(3) Determining partners.--A person shall be treated as 
        partner of the partnership if such person is a partner of such 
        partnership at any time during the reviewed or adjustment year.
    ``(e) Payments Nondeductible.--No deduction shall be allowed under 
subtitle A for any payment required to be made by a partnership under 
this subchapter.
    ``(f) Special Rule for Deductions, Losses, and Credits of Foreign 
Partnerships.--Except to the extent otherwise provided in regulations, 
in the case of any partnership the partnership representative of which 
resides outside the United States or the books of which are maintained 
outside the United States, no deduction, loss, or credit shall be 
allowable to any partner unless section 6031 is complied with for the 
partnership's taxable year in which such deduction, loss, or credit 
arose at such time as the Secretary prescribes by regulations.
    ``(g) Partnerships Having Principal Place of Business Outside 
United States.--For purposes of sections 6234, a principal place of 
business located outside the United States shall be treated as located 
in the District of Columbia.
    ``(h) Partnerships in Cases Under Title 11 of United States Code.--
            ``(1) Suspension of period of limitations on making 
        adjustment, assessment, or collection.--The running of any 
        period of limitations provided in this subchapter on making a 
        partnership adjustment (or provided by section 6501 or 6502 on 
        the assessment or collection of any imputed underpayment 
        determined under this subchapter) shall, in a case under title 
        11 of the United States Code, be suspended during the period 
        during which the Secretary is prohibited by reason of such case 
        from making the adjustment (or assessment or collection) and--
                    ``(A) for adjustment or assessment, 60 days 
                thereafter, and
                    ``(B) for collection, 6 months thereafter.
        A rule similar to the rule of section 6213(f)(2) shall apply 
        for purposes of section 6232(b).
            ``(2) Suspension of period of limitation for filing for 
        judicial review.--The running of the period specified in 
        section 6234 shall, in a case under title 11 of the United 
        States Code, be suspended during the period during which the 
        partnership is prohibited by reason of such case from filing a 
        petition under section 6234 and for 60 days thereafter.
    ``(i) Treatment Where Partnership Ceases To Exist.--If a 
partnership ceases to exist before a partnership adjustment under this 
subchapter takes effect, such adjustment shall be taken into account by 
the former partners of such partnership under regulations prescribed by 
the Secretary.''.
            (2) Clerical amendment.--The table of subchapters for 
        chapter 63 of such Code, as amended by the preceding provisions 
        of this section, is amended by inserting after the item 
        relating to subchapter B the following new items:

             ``subchapter c. treatment of partnerships.''.

    (d) Conforming Amendments.--
            (1) Section 6031(b) of such Code is amended by striking the 
        last sentence.
            (2) Section 6422 of such Code is amended by striking 
        paragraph (12).
            (3) Section 6501(n) of such Code is amended by striking 
        paragraphs (2) and (3) and by striking ``Cross References'' and 
        all that follows through ``For period of limitations'' and 
        inserting ``Cross Reference.--For period of limitations''.
            (4) Section 6503(a)(1) of such Code is amended by striking 
        ``(or section 6229'' and all that follows through ``of section 
        6230(a))''.
            (5) Section 6504 of such Code is amended by striking 
        paragraph (11).
            (6) Section 6511 of such Code is amended by striking 
        subsection (g).
            (7) Section 6512(b)(3) of such Code is amended by striking 
        the second sentence.
            (8) Section 6515 of such Code is amended by striking 
        paragraph (6).
            (9) Section 6601(c) of such Code is amended by striking the 
        last sentence.
            (10) Section 7421(a) of such Code is amended by striking 
        ``6225(b), 6246(b)'' and inserting ``6232(c)''.
            (11) Section 7422 of such Code is amended by striking 
        subsection (h).
            (12) Section 7459(c) of such Code is amended by striking 
        ``section 6226'' and all that follows through ``or 6252'' and 
        inserting ``section 6234''.
            (13) Section 7482(b)(1) of such Code is amended--
                    (A) in subparagraph (E), by striking ``section 
                6226, 6228, 6247, or 6252'' and inserting ``section 
                6234'',
                    (B) by striking subparagraph (F), by striking 
                ``or'' at the end of subparagraph (E) and inserting a 
                period, and by inserting ``or'' at the end of 
                subparagraph (D), and
                    (C) in the last sentence, by striking ``section 
                6226, 6228(a), or 6234(c)'' and inserting ``section 
                6234''.
            (14) Section 7485(b) of such Code is amended by striking 
        ``section 6226, 6228(a), 6247, or 6252'' and inserting 
        ``section 6234''.
    (e) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to returns filed 
        for partnership taxable years ending after December 31, 2018.
            (2) Election.--A partnership may elect (at such time and in 
        such form and manner as the Secretary of the Treasury may 
        prescribe) for the amendments made by this section (other than 
        the election under section 6221(b) of such Code (as added by 
        this Act)) to apply to any return of the partnership filed for 
        partnership taxable years ending after the date of the 
        enactment of this Act and before January 1, 2019.
                                 <all>
```