Source: https://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title26-chapter63-subchapterC&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGUyNi1zZWN0aW9uNjIyNg%3D%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim
Timestamp: 2020-06-07 02:59:15
Document Index: 699177110

Matched Legal Cases: ['§402', '§1101', '§206', '§6225', '§1101', '§411', '§202', '§402', '§1239', '§1101', '§202', '§202', '§203', '§206', '§202', '§202', '§202', '§206', '§202', '§411', '§411', '§6226', '§1101', '§411', '§201', '§402', '§306', '§902', '§1238', '§1101', '§206', '§201', '§206', '§206', '§204', '§206', '§206', '§206', '§206', '§204', '§204', '§6227', '§1101', '§201', '§1101', '§402', '§1236', '§417', '§402', '§306', '§902', '§417', '§402', '§1875', '§1018', '§1233', '§416', '§513', '§402', '§714', '§1875', '§1018', '§902', '§1237', '§3201', '§11', '§201', '§206', '§206', '§206', '§1101', '§1222', '§1307', '§206', 'ART 2', '§6241', '§1101', '§201', '§1222', '§1101', '§4', '§1307', '§1222', '§1101', '§4', '§1307', '§4', '§1307', '§4', '§1307', '§1222', '§1101', '§4', '§1307', '§1101', '§1222', '§1222', '§1222', '§1222', '§1222', '§1222', '§201', '§206', '§201', '§206', '§206', '§206']

[USC02] 26 USC Subtitle F, CHAPTER 63, Subchapter C: Treatment of Partnerships
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26 USC Subtitle F, CHAPTER 63, Subchapter C: Treatment of Partnerships
From Title 26—INTERNAL REVENUE CODESubtitle F—Procedure and AdministrationCHAPTER 63—ASSESSMENT
Subchapter C—Treatment of Partnerships
Partnership adjustments.
A prior subchapter C, added Pub. L. 97–248, title IV, §402(a), Sept. 3, 1982, 96 Stat. 648, consisting of sections 6221 to 6234, related to tax treatment of partnership items, prior to repeal by Pub. L. 114–74, title XI, §1101(a), (g), Nov. 2, 2015, 129 Stat. 625, 638, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017, with certain exceptions.
Partnership adjustment by Secretary.
Alternative to payment of imputed underpayment by partnership.
Administrative adjustment request by partnership.
2018—Pub. L. 115–141, div. U, title II, §206(p)(10), Mar. 23, 2018, 132 Stat. 1183, amended part II heading generally, reenacting heading without change.
§6225. Partnership adjustment by Secretary
In the case of any adjustments by the Secretary to any partnership-related items with respect to any reviewed year of a partnership—
(1) if such adjustments result in an imputed underpayment, the partnership shall pay an amount equal to such imputed underpayment in the adjustment year as provided in section 6232, and
(2) if such adjustments do not result in an imputed underpayment, such adjustments shall be taken into account by the partnership in the adjustment year.
(b) Determination of imputed underpayments
Except as otherwise provided in this section, any imputed underpayment with respect to any reviewed year shall be determined by the Secretary by—
(A) appropriately netting all partnership adjustments with respect to such reviewed year, and
(B) applying the highest rate of tax in effect for the reviewed year under section 1 or 11.
(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 by disregarding so much of such adjustment as results in a decrease in the amount of the imputed underpayment.
(3) Adjustments separately netted by category
For purposes of paragraph (1)(A), partnership adjustments for any reviewed year shall first be separately determined (and netted as appropriate) within each category of items that are required to be taken into account separately under section 702(a) or other provision of this title.
(4) Limitation on adjustments that may be taken into account
If any adjustment would (but for this paragraph)—
(A) result in a decrease in the amount of the imputed underpayment, and
(B) could be subject to any additional limitation under the provisions of this title (or not allowed, in whole or in part, against ordinary income) if such adjustment were taken into account by any person,
such adjustment shall not be taken into account under paragraph (1)(A) except to the extent otherwise provided by the Secretary.
(c) Modification of imputed underpayments
(2) Procedures for partners to take adjustments into account
(A) Amended returns of partners
(i) one or more partners file returns for the taxable year of the partners which includes the end of the reviewed year of the partnership (and for any taxable year with respect to which any tax attribute is affected by reason of any adjustment referred to in clause (ii)),
(ii) such returns take into account all adjustments under subsection (a) properly allocable to such partners (and the effect of such adjustments on any tax attributes), and
(iii) payment of any tax due is included with such returns,
(B) Alternative procedure to filing amended returns
Such procedures shall provide that, with respect to any partner referred to in subparagraph (A), the requirements of subparagraph (A) shall be treated as satisfied with respect to adjustments properly allocable to such partner if, in lieu of filing the returns described in such subparagraph—
(i) the amounts described in subparagraph (A)(iii) are paid by the partner,
(ii) the partner agrees to take into account, in the form and manner prescribed by the Secretary, the adjustments to the tax attributes of such partner referred to in subparagraph (A)(ii), and
(iii) such partner provides, in the form and manner specified by the Secretary (including, if the Secretary so specifies, in the same form as on an amended return), such information as the Secretary may require to carry out this subparagraph.
(C) Reallocation of distributive share
In the case of any adjustment which reallocates the distributive share of any item from one partner to another, this paragraph shall apply with respect to any such partner only if the requirements of subparagraph (A) or (B) are satisfied with respect to all partners affected by such adjustment.
(D) Application of statute of limitations
In the case of adjustments referred to in subparagraph (A)(ii), sections 6501 and 6511 shall not apply with respect to any return filed for purposes of subparagraph (A)(i) or any amount paid under subparagraph (A)(iii) or (B)(i).
(E) Adjustments to tax attributes binding for affected taxable years of partner
The adjustments to the tax attributes of any partner provided for in subparagraph (A)(ii) or (B)(ii) shall be binding with respect to the taxable year of the partner which includes the end of the reviewed year of the partnership and any taxable years for which any tax attribute is affected by such adjustment. Any failure to so treat any such tax attribute shall be treated for purposes of this title in the same manner as a failure to treat a partnership-related item in a manner which is consistent with the treatment of such item on the partnership return within the meaning of section 6222.
(F) 1 Application to partnerships and S corporations in tiered structures
In the case of any partnership any partner of which is a partnership, subparagraph (A) or (B) may apply with respect to any partner (hereafter in this subparagraph referred to as the "relevant partner") in the chain of ownership of such partnerships if—
(I) such information as the Secretary may require is furnished to the Secretary for purposes of carrying out this paragraph with respect to such partnerships (including any information the Secretary may require with respect to any chain of ownership of the relevant partner), and
(II) to such extent as the Secretary may require, each partnership in the chain of ownership between the relevant partner and the audited partnership satisfies the requirements of subparagraph (A) or (B).
(ii) Treatment of S corporations
For purposes of clause (i), an S corporation and its shareholders shall be treated in the same manner as a partnership and its partners.
(F) 1 Adjustments not treated as amended return
An administrative adjustment request under section 6227 and a partnership adjustment tracking report under section 6226(b)(4)(A) shall not be treated as a return for purposes of this paragraph.
(3) Tax-exempt partners
Such procedures shall provide for determining the imputed underpayment without regard to the portion of the adjustment that the partnership demonstrates is allocable to a partner that would not owe tax by reason of its status as a tax-exempt entity (as defined in section 168(h)(2)).
(4) Modification of applicable highest tax rates
Such procedures shall provide for taking into account a rate of tax lower than the rate of tax described in subsection (b)(1)(A) with respect to any portion of the adjustment that the partnership demonstrates is allocable to a partner which—
(i) is a C corporation, or
(ii) in the case of a capital gain or qualified dividend, is an individual.
(B) Portion of imputed underpayment to which lower rate applies
Except as provided in clause (ii), the portion of the imputed underpayment to which the lower rate applies with respect to a partner under subparagraph (A) shall be determined by reference to the partners' distributive share of items to which the imputed underpayment relates.
(ii) Rule in case of varied treatment of items among partners
If the imputed underpayment is attributable to the adjustment of more than 1 item, and any partner's distributive share of such items is not the same with respect to all such items, then the portion of the imputed underpayment to which the lower rate applies with respect to a partner under subparagraph (A) shall be determined by reference to the amount which would have been the partner's distributive share of net gain or loss if the partnership had sold all of its assets at their fair market value as of the close of the reviewed year of the partnership.
(5) Certain passive losses of publicly traded partnerships
In the case of a publicly traded partnership (as defined in section 469(k)(2)), such procedures shall provide—
(i) for determining the imputed underpayment without regard to the portion of the adjustment that the partnership demonstrates is attributable to a net decrease in a specified passive activity loss which is allocable to a specified partner, and
(ii) for the partnership to take such net decrease into account as an adjustment in the adjustment year with respect to the specified partners to which such net decrease relates.
(B) Specified passive activity loss
For purposes of this paragraph, the term "specified passive activity loss" means, with respect to any specified partner of such publicly traded partnership, the lesser of—
(i) the passive activity loss of such partner which is separately determined with respect to such partnership under section 469(k) with respect to such partner's taxable year in which or with which the reviewed year of such partnership ends, or
(ii) such passive activity loss so determined with respect to such partner's taxable year in which or with which the adjustment year of such partnership ends.
(C) Specified partner
For purposes of this paragraph, the term "specified partner" means any person if such person—
(i) is a partner of the publicly traded partnership referred to in subparagraph (A),
(ii) is described in section 469(a)(2), and
(iii) has a specified passive activity loss with respect to such publicly traded partnership,
with respect to each taxable year of such person which is during the period beginning with the taxable year of such person in which or with which the reviewed year of such publicly traded partnership ends and ending with the taxable year of such person in which or with which the adjustment year of such publicly traded partnership ends.
(6) Other procedures for modification of imputed underpayment
(7) Year and day for submission to Secretary
Anything required to be filed or submitted under this subsection shall be submitted to the Secretary not later than the close of 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.
(8) Decision of Secretary
(9) Modification of adjustments not resulting in an imputed underpayment
The Secretary shall establish procedures under which the adjustments described in subsection (a)(2) may be modified in such manner as the Secretary determines appropriate.
(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 6227, such administrative adjustment request is made, or
(C) in any other case, notice of the final partnership adjustment is mailed under section 6231.
(Added Pub. L. 114–74, title XI, §1101(c)(1), Nov. 2, 2015, 129 Stat. 628; amended Pub. L. 114–113, div. Q, title IV, §411(a), Dec. 18, 2015, 129 Stat. 3121; Pub. L. 115–141, div. U, title II, §§202, 203(a), 206(b), (p)(1), Mar. 23, 2018, 132 Stat. 1173, 1174, 1178, 1182.)
A prior section 6225, added Pub. L. 97–248, title IV, §402(a), Sept. 3, 1982, 96 Stat. 652; amended Pub. L. 105–34, title XII, §1239(a), Aug. 5, 1997, 111 Stat. 1027, allowing assessments to be made only after partnership level proceedings were completed, was repealed by Pub. L. 114–74, title XI, §1101(a), Nov. 2, 2015, 129 Stat. 625.
2018—Subsec. (a). Pub. L. 115–141, §202(c)(1), amended subsec. (a) generally. Prior to amendment, subsec. (a) related to 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.
Subsec. (b). Pub. L. 115–141, §202(a), amended subsec. (b) generally. Prior to amendment, subsec. (b) consisted of pars. (1) and (2) relating to determination of imputed underpayments in general and adjustments to distributive shares of partners not netted, respectively.
Subsec. (c)(2). Pub. L. 115–141, §203(a), amended par. (2) generally. Prior to amendment, par. (2) related to amended returns of partners.
Subsec. (c)(2)(F). Pub. L. 115–141, §206(b), added subpar. (F) relating to adjustments not treated as amended return.
Subsec. (c)(3). Pub. L. 115–141, §202(b)(1), substituted "without regard to the portion of the adjustment" for "without regard to the portion thereof".
Subsec. (c)(4)(A). Pub. L. 115–141, §202(b)(2), substituted "with respect to any portion of the adjustment" for "with respect to any portion of the imputed underpayment" in introductory provisions.
Subsec. (c)(5)(A)(i). Pub. L. 115–141, §202(b)(3), substituted "without regard to the portion of the adjustment" for "without regard to the portion thereof".
Subsec. (c)(7). Pub. L. 115–141, §206(p)(1), substituted "filed or submitted under this subsection" for "submitted pursuant to paragraph (1)".
Subsec. (c)(9). Pub. L. 115–141, §202(c)(2), added par. (9).
2015—Subsec. (c)(4)(A)(i). Pub. L. 114–113, §411(a)(1), struck out "in the case of ordinary income," before "is a C corporation".
Subsec. (c)(5) to (8). Pub. L. 114–113, §411(a)(2), added par. (5) and redesignated former pars. (5) to (7) as (6) to (8), respectively.
1 So in original. Two subpars. (F) have been enacted.
§6226. Alternative to payment of imputed underpayment by partnership
(1) not later than 45 days after the date of the notice of final partnership adjustment, elects the application of this section with respect to an imputed underpayment, and
(2) at such time and in such manner as the Secretary may provide, furnishes to each partner of the partnership for the reviewed year and to the Secretary a statement of the partner's share of any adjustment to a partnership-related item (as determined in the notice of final partnership adjustment),
section 6225 shall not apply with respect to such underpayment (and no assessment of tax, levy, or proceeding in any court for the collection of such underpayment shall be made against such partnership) and each such partner shall take such adjustment into account as provided in subsection (b). The election under paragraph (1) shall be made in such manner as the Secretary may provide and, once made, shall be revocable only with the consent of the Secretary.
(b) Adjustments taken into account by partner
(1) Tax imposed in year of statement
Except as provided in paragraph (4), each partner's tax imposed by chapter 1 for the taxable year which includes the date the statement was furnished under subsection (a) shall be adjusted by the aggregate of the correction amounts determined under paragraph (2) for the taxable years referred to therein.
(2) Correction amounts
The correction amounts determined under this paragraph are—
(A) in the case of the taxable year of the partner which includes the end of the reviewed year, the amount by which the tax imposed under chapter 1 would increase or decrease if the partner's share of the adjustments described in subsection (a) were taken into account for such taxable year, and
(B) in the case of any taxable year after the taxable year referred to in subparagraph (A) and before the taxable year referred to in paragraph (1), the amount by which the tax imposed under chapter 1 would increase or decrease by reason of the adjustment to tax attributes under paragraph (3).
(3) Adjustment of tax attributes
(A) in the case of any taxable year referred to in paragraph (2)(B), be appropriately adjusted for purposes of applying such paragraph, and
(B) in the case of any subsequent taxable year, be appropriately adjusted.
(4) Treatment of partnerships and S corporations in tiered structures
If a partner which receives a statement under subsection (a)(2) is a partnership or an S corporation, such partner shall, with respect to the partner's share of the adjustment—
(i) file with the Secretary a partnership adjustment tracking report which includes such information as the Secretary may require, and
(ii)(I) furnish statements under rules similar to the rules of subsection (a)(2), or
(II) if no such statements are furnished, compute and pay an imputed underpayment under rules similar to the rules of section 6225 (other than paragraphs (2), (7), and (9) of subsection (c) thereof).
For purposes of subparagraph (A), with respect to a partner's share of the adjustment, the partnership adjustment tracking report shall be filed, and the imputed underpayment shall be paid or statements shall be furnished, not later than the due date for the return for the adjustment year of the audited partnership.
(C) Partnership payment of tax if elected out of subchapter
In the case of a partnership which has elected the application of section 6221(b) with respect to the taxable year of the partnership which includes the end of the reviewed year of the audited partnership, this paragraph shall apply notwithstanding such election.
(D) Audited partnership
For purposes of this paragraph, the term "audited partnership" means, with respect to any partner described in subparagraph (A), the partnership in the chain of ownership originally electing the application of this section.
(E) Treatment of trusts
The Secretary shall prescribe such rules as may be necessary with respect to trusts which receive a statement under subsection (a)(2).
In the case of an imputed underpayment with respect to which the application of this section is elected, or which is described in subsection (b)(4)(A)(ii)(I), interest shall be determined—
(A) at the partner level,
(B) from the due date of the return for the taxable year to which the increase is attributable (determined by taking into account any increases attributable to a change in tax attributes for a taxable year under subsection (b)(2)), and
(C) at the underpayment rate under section 6621(a)(2), determined by substituting "5 percentage points" for "3 percentage points" in subparagraph (B) thereof.
For the time period within which a partnership may file a petition for a readjustment, see section 6234(a).
(Added Pub. L. 114–74, title XI, §1101(c)(1), Nov. 2, 2015, 129 Stat. 630; amended Pub. L. 114–113, div. Q, title IV, §411(b)(1), Dec. 18, 2015, 129 Stat. 3122; Pub. L. 115–141, div. U, title II, §§201(c)(4), 204, 206(d), (e), Mar. 23, 2018, 132 Stat. 1173, 1176, 1178.)
A prior section 6226, added Pub. L. 97–248, title IV, §402(a), Sept. 3, 1982, 96 Stat. 653; amended Pub. L. 97–448, title III, §306(c)(1)(A), Jan. 12, 1983, 96 Stat. 2406; Pub. L. 102–572, title IX, §902(b)(2), Oct. 29, 1992, 106 Stat. 4516; Pub. L. 105–34, title XII, §§1238(b)(1), 1239(b), 1240(a), Aug. 5, 1997, 111 Stat. 1026–1028, related to judicial review of final partnership administrative adjustments, prior to repeal by Pub. L. 114–74, title XI, §1101(a), Nov. 2, 2015, 129 Stat. 625.
2018—Subsec. (a). Pub. L. 115–141, §206(d), inserted "(and no assessment of tax, levy, or proceeding in any court for the collection of such underpayment shall be made against such partnership)" after "section 6225 shall not apply with respect to such underpayment" in concluding provisions.
Subsec. (a)(2). Pub. L. 115–141, §201(c)(4), substituted "any adjustment to a partnership-related item" for "any adjustment to income, gain, loss, deduction, or credit".
Subsec. (b)(1). Pub. L. 115–141, §206(e)(2), substituted "correction amounts" for "adjustment amounts".
Pub. L. 115–141, §206(e)(1), substituted "adjusted" for "increased".
Pub. L. 115–141, §204(b)(1), substituted "Except as provided in paragraph (4), each partner's" for "Each partner's".
Subsec. (b)(2). Pub. L. 115–141, §206(e)(5), substituted "Correction amounts" for "Adjustment amounts" in heading.
Pub. L. 115–141, §206(e)(3), substituted "increase or decrease" for "increase" in subpars. (A) and (B).
Pub. L. 115–141, §206(e)(2), substituted "correction amounts" for "adjustment amounts" in introductory provisions.
Subsec. (b)(2)(A). Pub. L. 115–141, §206(e)(4), substituted "and" for "plus" at end.
Subsec. (b)(4). Pub. L. 115–141, §204(a), added par. (4).
Subsec. (c)(2). Pub. L. 115–141, §204(b)(2), inserted "or which is described in subsection (b)(4)(A)(ii)(I)," after "is elected," in introductory provisions.
2015—Subsec. (d). Pub. L. 114–113 added subsec. (d).
§6227. Administrative adjustment request by partnership
A partnership may file a request for an administrative adjustment in the amount of one or more partnership-related items for any partnership taxable year.
Any such adjustment under subsection (a) shall be determined and taken into account for the partnership taxable year in which the administrative adjustment request is filed—
(1) by the partnership under rules similar to the rules of section 6225 (other than paragraphs (2), (7), and (9) of subsection (c) thereof) for the partnership taxable year in which the administrative adjustment request is filed, or
(2) by the partnership and partners under rules similar to the rules of section 6226 (determined without regard to the substitution described in subsection (c)(2)(C) thereof).
(1) the date on which the partnership return for such year is filed, or
(2) the last day for filing the partnership return for such year (determined without regard to extensions).
(d) Coordination with adjustments related to foreign tax credits
The Secretary shall issue regulations or other guidance which provide for the proper coordination of this section and section 905(c).
(Added Pub. L. 114–74, title XI, §1101(c)(1), Nov. 2, 2015, 129 Stat. 631; amended Pub. L. 115–141, div. U, title II, §§201(c)(5), 206(f), (p)(2), (3), Mar. 23, 2018, 132 Stat. 1173, 1179, 1182.)
Prior sections 6227 to 6230 were repealed by Pub. L. 114–74, title XI, §1101(a), (g), Nov. 2, 2015, 129 Stat. 625, 638, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017.
Section 6227, added Pub. L. 97–248, title IV, §402(a), Sept. 3, 1982, 96 Stat. 655; amended Pub. L. 105–34, title XII, §§1236(a), 1243(a), Aug. 5, 1997, 111 Stat. 1025, 1029; Pub. L. 107–147, title IV, §417(19)(A), Mar. 9, 2002, 116 Stat. 56, related to administrative adjustment requests.
Section 6228, added Pub. L. 97–248, title IV, §402(a), Sept. 3, 1982, 96 Stat. 656; amended Pub. L. 97–448, title III, §306(c)(1)(B), Jan. 12, 1983, 96 Stat. 2406; Pub. L. 102–572, title IX, §902(b)(2), Oct. 29, 1992, 106 Stat. 4516; Pub. L. 107–147, title IV, §417(19)(B), Mar. 9, 2002, 116 Stat. 56, related to judicial review where administrative adjustment request is not allowed in full.
Section 6229, added Pub. L. 97–248, title IV, §402(a), Sept. 3, 1982, 96 Stat. 659; amended Pub. L. 99–514, title XVIII, §1875(d)(1), Oct. 22, 1986, 100 Stat. 2896; Pub. L. 100–647, title I, §1018(o)(3), Nov. 10, 1988, 102 Stat. 3585; Pub. L. 105–34, title XII, §§1233(a)–(c), 1235(a), Aug. 5, 1997, 111 Stat. 1023, 1024; Pub. L. 107–147, title IV, §416(d)(1)(B), Mar. 9, 2002, 116 Stat. 55; Pub. L. 111–147, title V, §513(a)(2)(B), Mar. 18, 2010, 124 Stat. 112, related to period of limitations for making assessments.
Section 6230, added Pub. L. 97–248, title IV, §402(a), Sept. 3, 1982, 96 Stat. 660; amended Pub. L. 98–369, div. A, title VII, §714(p)(2)(A), July 18, 1984, 98 Stat. 964; Pub. L. 99–514, title XVIII, §1875(d)(2)(A), Oct. 22, 1986, 100 Stat. 2896; Pub. L. 100–647, title I, §1018(o)(1), Nov. 10, 1988, 102 Stat. 3584; Pub. L. 102–572, title IX, §902(b)(2), Oct. 29, 1992, 106 Stat. 4516; Pub. L. 105–34, title XII, §§1237(a)–(c)(1), 1238(b)(2)–(6), 1239(c)(1), Aug. 5, 1997, 111 Stat. 1025–1028; Pub. L. 105–206, title III, §3201(e)(2), July 22, 1998, 112 Stat. 740; Pub. L. 110–172, §11(a)(36), Dec. 29, 2007, 121 Stat. 2487, related to additional administrative provisions.
2018—Subsec. (a). Pub. L. 115–141, §201(c)(5), substituted "partnership-related items" for "items of income, gain, loss, deduction, or credit of the partnership".
Subsec. (b). Pub. L. 115–141, §206(p)(2), substituted "is filed" for "is made" in introductory provisions and in par. (1).
Subsec. (b)(1). Pub. L. 115–141, §206(p)(3), which directed substitution of "paragraphs (2), (7), and (9)" for "paragraphs (2), (6), and (7)", was executed by making the substitution for "paragraphs (2), (6) and (7)" to reflect the probable intent of Congress.
Subsec. (d). Pub. L. 115–141, §206(f), added subsec. (d).
A prior subchapter D, Treatment of Electing Large Partnerships, consisted of sections 6240 to 6255, prior to repeal by Pub. L. 114–74, title XI, §1101(b)(2), (g), Nov. 2, 2015, 129 Stat. 625, 638, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017.
Section 6240, added Pub. L. 105–34, title XII, §1222(a), Aug. 5, 1997, 111 Stat. 1009, related to application of subchapter D to electing large partnerships and partners in such partnerships.
Another prior subchapter D, Tax Treatment of Subchapter S Items, consisted of sections 6241 to 6245, prior to repeal by Pub. L. 104–188, title I, §1307(c)(1), Aug. 20, 1996, 110 Stat. 1781.
2018—Pub. L. 115–141, div. U, title II, §206(p)(12), Mar. 23, 2018, 132 Stat. 1183, amended part heading generally, substituting "PART IV—DEFINITIONS AND SPECIAL RULES" for "PART 2—DEFINITIONS AND SPECIAL RULES".
§6241. Definitions and special rules
The term "partnership" means any partnership required to file a return under section 6031(a).
(2) Partnership adjustment
The term "partnership adjustment" means any adjustment to a partnership-related item.
(B) Partnership-related item
The term "partnership-related item" means—
(i) any item or amount with respect to the partnership (without regard to whether or not such item or amount appears on the partnership's return and including an imputed underpayment and any item or amount relating to any transaction with, basis in, or liability of, the partnership) which is relevant (determined without regard to this subchapter) in determining the tax liability of any person under chapter 1, and
(ii) any partner's distributive share of any item or amount described in clause (i).
(3) 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).
(4) Payments nondeductible
(5) Partnerships having principal place of business outside United States
For purposes of section 6234, a principal place of business located outside the United States shall be treated as located in the District of Columbia.
(6) Partnerships in cases under title 11 of United States Code
(A) Suspension of period of limitations on making adjustment, assessment, or collection
(i) for adjustment or assessment, 60 days thereafter, and
(ii) for collection, 6 months thereafter.
(B) Suspension of period of limitation for filing for judicial review
(7) Treatment where partnership ceases to exist
(8) Extension to entities filing partnership return
(9) Coordination with other chapters
This subchapter shall not apply with respect to any tax imposed (including any amount required to be deducted or withheld) under chapter 2, 2A, 3, or 4, except that any partnership adjustment determined under this subchapter for purposes of chapter 1 shall be taken into account for purposes of determining any such tax to the extent that such adjustment is relevant to such determination.
(B) Timing of withholding
In the case of any tax imposed (including any amount required to be deducted or withheld) under chapter 3 or 4, which is determined with respect to an adjustment described in subparagraph (A), such tax—
(i) shall be so determined with respect to the reviewed year, and
(ii) shall be so imposed (or so required to be deducted or withheld) with respect to the adjustment year.
(C) Statute of limitation on assessment
For special rule with respect to limitation on assessment of taxes under chapter 2 or 2A which are attributable to any partnership adjustment, see section 6501(c)(12).
(10) Authority to require electronic filing
Notwithstanding section 6011(e), the Secretary may require that anything required to be filed or submitted under section 6225(c), or to be furnished to or filed with the Secretary under section 6226, be so filed, submitted, or furnished by magnetic media or in other machine-readable form.
(11) Treatment of special enforcement matters
In the case of partnership-related items which involve special enforcement matters, the Secretary may prescribe regulations pursuant to which—
(i) this subchapter (or any portion thereof) does not apply to such items, and
(ii) such items are subject to such special rules (including rules related to assessment and collection) as the Secretary determines to be necessary for the effective and efficient enforcement of this title.
(B) Special enforcement matters
For purposes of subparagraph (A), the term "special enforcement matters" means—
(i) failure to comply with the requirements of section 6226(b)(4)(A)(ii),
(ii) assessments under section 6851 (relating to termination assessments of income tax) or section 6861 (relating to jeopardy assessments of income, estate, gift, and certain excise taxes),
(iii) criminal investigations,
(iv) indirect methods of proof of income,
(v) foreign partners or partnerships, and
(vi) other matters that the Secretary determines by regulation present special enforcement considerations.
(12) United States shareholders and certain other persons treated as partners
Except as otherwise provided by the Secretary, in the case of any controlled foreign corporation (as defined in section 957 or 953(c)(1)) which is a partner of a partnership, each United States shareholder (as defined in section 951(b) or 953(c)(1)) with respect to such controlled foreign corporation shall be treated for purposes of this subchapter as a partner of such partnership. For purposes of the preceding sentence, any distributive share of any such United States shareholder with respect to such partnership shall, except as otherwise provided by the Secretary, be equal to such United States shareholder's pro rata share with respect to such controlled foreign corporation (determined under rules similar to the rules of section 951(a)(2)).
(B) Passive foreign investment companies
For purposes of subparagraph (A), in the case of a passive foreign investment company (as defined in section 1297), each taxpayer that makes an election under section 1295 with respect to such company shall be treated in the same manner as United States shareholders under subparagraph (A), except that such taxpayer's pro rata share with respect to the passive foreign investment company shall be determined under rules similar to the rules of section 1293(b).
(C) Regulations or other guidance
The Secretary shall issue such regulations or other guidance as is necessary or appropriate to carry out the purposes of this paragraph, including regulations which apply the rules of subparagraph (A) in similar circumstances or with respect to similarly situated persons.
(Added Pub. L. 114–74, title XI, §1101(c)(1), Nov. 2, 2015, 129 Stat. 636; amended Pub. L. 115–141, div. U, title II, §§201(a), (b)(1), 206(c), (l), (m), (p)(7), Mar. 23, 2018, 132 Stat. 1171, 1172, 1178, 1180-1182.)
A prior section 6241, added Pub. L. 105–34, title XII, §1222(a), Aug. 5, 1997, 111 Stat. 100, related to consistency of a partner's return with the partnership return, prior to repeal by Pub. L. 114–74, title XI, §1101(b)(2), (g), Nov. 2, 2015, 129 Stat. 625, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017.
Another prior section 6241, added Pub. L. 97–354, §4(a), Oct. 19, 1982, 96 Stat. 1691, directed that tax treatment be determined at the corporate level, prior to repeal by Pub. L. 104–188, title I, §§1307(c)(1), 1317(a), Aug. 20, 1996, 110 Stat. 1781, 1787, applicable to taxable years beginning after Dec. 31, 1996.
A prior section 6242, added Pub. L. 105–34, title XII, §1222(a), Aug. 5, 1997, 111 Stat. 1010, related to procedures for taking partnership adjustments into account, prior to repeal by Pub. L. 114–74, title XI, §1101(b)(2), (g), Nov. 2, 2015, 129 Stat. 625, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017.
Another prior section 6242, added Pub. L. 97–354, §4(a), Oct. 19, 1982, 96 Stat. 1691, directed that shareholder's return be consistent with corporate return, prior to repeal by Pub. L. 104–188, title I, §§1307(c)(1), 1317(a), Aug. 20, 1996, 110 Stat. 1781, 1787, applicable to taxable years beginning after Dec. 31, 1996.
A prior section 6243, added Pub. L. 97–354, §4(a), Oct. 19, 1982, 96 Stat. 1691, directed that shareholders be notified of proceedings and given opportunity to participate, prior to repeal by Pub. L. 104–188, title I, §§1307(c)(1), 1317(a), Aug. 20, 1996, 110 Stat. 1781, 1787, applicable to taxable years beginning after Dec. 31, 1996.
A prior section 6244, added Pub. L. 97–354, §4(a), Oct. 19, 1982, 96 Stat. 1691, directed that certain provisions of subchapter C apply to subchapter S items, prior to repeal by Pub. L. 104–188, title I, §§1307(c)(1), 1317(a), Aug. 20, 1996, 110 Stat. 1781, 1787, applicable to taxable years beginning after Dec. 31, 1996.
A prior section 6245, added Pub. L. 105–34, title XII, §1222(a), Aug. 5, 1997, 111 Stat. 1013, authorized and directed Secretary to make necessary partnership adjustment, prior to repeal by Pub. L. 114–74, title XI, §1101(b)(2), (g), Nov. 2, 2015, 129 Stat. 625, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017.
Another prior section 6245, added Pub. L. 97–354, §4(a), Oct. 19, 1982, 96 Stat. 1692, defined "subchapter S item" for purposes of subchapter, prior to repeal by Pub. L. 104–188, title I, §§1307(c)(1), 1317(a), Aug. 20, 1996, 110 Stat. 1781, 1787, applicable to taxable years beginning after Dec. 31, 1996.
Prior sections 6246 to 6255 were repealed by Pub. L. 114–74, title XI, §1101(b)(2), (g), Nov. 2, 2015, 129 Stat. 625, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017.
Section 6246, added Pub. L. 105–34, title XII, §1222(a), Aug. 5, 1997, 111 Stat. 1013, related to restrictions on partnership adjustments.
Section 6247, added Pub. L. 105–34, title XII, §1222(a), Aug. 5, 1997, 111 Stat. 1014, related to judicial review of partnership adjustment.
Section 6248, added Pub. L. 105–34, title XII, §1222(a), Aug. 5, 1997, 111 Stat. 1015, related to period of limitations for making adjustments under this subpart.
Section 6251, added Pub. L. 105–34, title XII, §1222(a), Aug. 5, 1997, 111 Stat. 1016, related to administrative adjustment requests.
Section 6252, added Pub. L. 105–34, title XII, §1222(a), Aug. 5, 1997, 111 Stat. 1016, related to judicial review where administrative adjustment request is not allowed in full.
Section 6255, added Pub. L. 105–34, title XII, §1222(a), Aug. 5, 1997, 111 Stat. 1017, defined terms for former subchapter D and listed special rules.
2018—Par. (2). Pub. L. 115–141, §201(a), amended par. (2) generally. Prior to amendment, text read as follows: "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."
Par. (5). Pub. L. 115–141, §206(p)(7), substituted "section 6234" for "sections 6234".
Par. (9). Pub. L. 115–141, §201(b)(1), added par. (9).
Par. (10). Pub. L. 115–141, §206(c), added par. (10).
Par. (11). Pub. L. 115–141, §206(l), added par. (11).
Par. (12). Pub. L. 115–141, §206(m), added par. (12).