The partnership can elect to combine most items of partnership income, deduction, credit, loss, and AMT adjustments and preferences at the partnership level and pass the net amounts through to the partners.
Special rules apply for oil and gas partnership activities.
Partnership pays tax on the adjustment at the highest individual or corporate rate plus interest and penalties, and no adjustment is passed through to the partners. Partnerships that make the election file Form 1065-B, U.S. Return of Income for Electing Large Partnerships, to report partnership items. N. Euclid Ave.