underpayment of tax imposed in the adjustment 
year. 
‘‘(3) PENALTIES.—Penalties, additions to tax, 
or additional amounts determined under this para-
graph are the penalties, additions to tax, or addi-
tional amounts that would be determined— 
‘‘(A) by applying section 6651(a)(2) to 
such failure to pay. 
‘‘(B) by treating the imputed under-
payment as an underpayment of tax for pur-
poses of part II of subchapter A of chapter 68. 
‘‘SEC. 6234. JUDICIAL REVIEW OF PARTNERSHIP ADJUST-
MENT. 
‘‘(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 re-
adjustment 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.— 
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‘‘(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 Sec-
retary, 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 depos-
ited 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 part-
nership adjustment relates, the proper allocation of such 
items among the partners, and the applicability of any 
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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 consid-
ered 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 ADJUST-
MENTS. 
‘‘(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 re-
turn for such taxable year was filed, 
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‘‘(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 im-
puted underpayment under section 6225(c), the date 
that is 270 days (plus the number of days of any ex-
tension consented to by the Secretary under para-
graph (4) thereof) after the date on which every-
thing required to be submitted to the Secretary pur-
suant to such section is so submitted. 
‘‘(b) EXTENSION BY AGREEMENT.—The period de-
scribed 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 de-
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scribed 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 pur-
poses of this section, a return executed by the Sec-
retary under subsection (b) of section 6020 on be-
half of the partnership shall not be treated as a re-
turn of the partnership. 
‘‘(d) SUSPENSION WHEN SECRETARY MAILS NOTICE 
OF ADJUSTMENT.—If notice of a final partnership adjust-
ment with respect to any taxable year is mailed under sec-
tion 6231, the running of the period specified in sub-
section (a) (as modified by the other provisions of this sec-
tion) 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. 
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‘‘SEC. 6241. DEFINITIONS AND SPECIAL RULES. 
‘‘(a) DEFINITIONS AND SPECIAL RULES.—For pur-
poses 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 li-
ability under subtitle A is determined in whole 
or in part by taking into account directly or in-
directly income, gain, deduction, or loss of the 
partnership. 
‘‘(b) PARTNERSHIP ADJUSTMENT.—The term ‘part-
nership 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 tax-
able 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 sever-
ally liable for any imputed underpayment and any 
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penalty, addition to tax, or additional amount attrib-
utable thereto. 
‘‘(2) PERIOD
FOR
ASSESSMENT
OF
PART-
NERS.—The period for assessment of an imputed 
underpayment with respect to a partner of a part-
nership shall not expire earlier than 3 years after 
the date on which an assessment of such imputed 
underpayment was made with respect to the partner-
ship. 
‘‘(3) DETERMINING PARTNERS.—A person shall 
be treated as partner of the partnership if such per-
son 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 ex-
tent otherwise provided in regulations, in the case of any 
partnership the partnership representative of which re-
sides 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 
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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 Dis-
trict of Columbia. 
‘‘(h) PARTNERSHIPS IN CASES UNDER TITLE 11 OF 
UNITED STATES CODE.— 
‘‘(1) SUSPENSION OF PERIOD OF LIMITATIONS 
ON MAKING ADJUSTMENT, ASSESSMENT, OR COLLEC-
TION.—The running of any period of limitations pro-
vided in this subchapter on making a partnership 
adjustment (or provided by section 6501 or 6502 on 
the assessment or collection of any imputed under-
payment determined under this subchapter) shall, in 
a case under title 11 of the United States Code, be 
suspended during the period during which the Sec-
retary 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. 
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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 part-
nership is prohibited by reason of such case from fil-
ing 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 partner-
ship adjustment under this subchapter takes effect, such 
adjustment shall be taken into account by the former part-
ners of such partnership under regulations prescribed by 
the Secretary.’’. 
(2) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 63 of such Code, as amended 
by the preceding provisions of this section, is amend-
ed 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. 
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(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 amend-
ed 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). 
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(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 amend-
ed— 
(A) in subparagraph (E), by striking ‘‘sec-
tion 6226, 6228, 6247, or 6252’’ and inserting 
‘‘section 6234’’, 
(B) by striking subparagraph (F), by strik-
ing ‘‘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 ‘‘sec-
tion 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 para-
graph (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 Sec-
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retary 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 end-
ing after the date of the enactment of this Act and 
before January 1, 2019. 
Æ 
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