2023 Laws of Puerto Rico › TITLE THIRTEEN - Taxation and Finance (§§ 1 — 33423) › Subtitle 17 - Internal Revenue Code of 2011 (§§ 30001 — 33423) › PART VII - Administrative Provisions, Procedures, Interests, Penalties, and Additions to Taxes (§§ 33001 — 33423) › Chapter 1070 - Provisions Applicable to Partnerships and Members (§§ 33414 — 33423) › § 33416 - Procedures for taking partnership adjustments into account

(a) Adjustments flow through partners for year in which adjustment takes effect.—
(1) In general.— If any partnership adjustment with respect to any partnership item takes effect (within the meaning of subsection (d)(2)) during any partnership taxable year, such adjustment shall be taken into account in determining the amount of such item for the partnership taxable year in which such adjustment takes effect. In applying this Code to any person who is (directly or indirectly) a partner in such partnership during such partnership taxable year, such adjustment shall be treated as an item actually arising during such taxable year.
(2) Partnership liable in certain cases.-If:
(A) A partnership elects under this paragraph to not take an adjustment into account under clause (1) of this subsection,
(B) a partnership does not make such an election but in filing its return for any partnership taxable year fails to take fully into account any partnership adjustment as required under clause (1) of this subsection, or
(C) any partnership adjustment involves a reduction in a credit which exceeds the amount of such credit determined for the partnership taxable year in which the adjustment takes effect, the partnership shall pay to the Secretary an amount determined by applying the rules of subsection (b)(4) to the adjustments not so taken into account and any excess referred to in paragraph (C) of this clause.
(3) Offsetting adjustments taken into account.— If a partnership adjustment requires another adjustment in a taxable year after the adjusted year and before the partnership taxable year in which such partnership adjustment takes effect, such other adjustment shall be taken into account under this subsection for the partnership taxable year in which such partnership adjustment takes effect.
(4) Coordination.— Amounts taken into account under this subsection for any partnership taxable year shall continue to be treated as adjustments for the adjusted year for purposes of determining whether such amounts may be readjusted under §§ 33417-33422 of this title.
(b) Partnership liable for interest and penalties.—
(1) In general.-If a partnership adjustment takes effect during any partnership taxable year and such adjustment results in an imputed underpayment for the adjusted year, the partnership:
(A) Shall pay to the Secretary interest computed under clause (2) of this subsection, and
(B) shall be liable for any penalty, addition to tax, or additional amount as provided in clause (3) of this subsection.
(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 § 33071 of this title on the imputed underpayment determined under clause (4) of this subsection with respect to such adjustment for the period beginning on the day after the return due date for the adjusted year and ending on the return due date for the partnership taxable year in which such adjustment takes effect (or, if earlier, in the case of any adjustment to which subsection (a)(2) applies, the date on which the payment under subsection (a)(2) is made).
Proper adjustments in the amount determined shall be made for adjustments required for partnership taxable years after the adjusted year and before the year in which the partnership adjustment takes effect 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 §§ 30041 et seq. of this title for the adjusted year and the imputed underpayment determined under clause (4) of this subsection were an actual underpayment (or understatement) for such year.
(4) Imputed underpayment.— For purposes of this subsection, the imputed underpayment determined under this clause with respect to any partnership adjustment is the underpayment (if any) which would result:
(A) By netting all adjustments to items of income, gain, loss, or deduction and by treating any net increase in income as an underpayment equal to the amount of such net increase multiplied by the highest rate of tax in effect under § 30061 or 30071 of this title for the adjusted year, and
(B) by taking adjustments to credits into account as increases or decreases (whichever is appropriate) in the amount of tax.
(C) For purposes of the paragraph (B) of this clause, any net decrease in a loss shall be treated as an increase in income and a similar rule shall apply to a net increase in a loss.
(c) Administrative provisions.—
(1) In general.— Any payment required by subsection (a)(2) or (b)(1)(A):
(A) Shall be assessed and collected in the same manner as if it were a tax, and
(B) shall be paid on or before the return due date for the partnership taxable year in which the partnership adjustment takes effect.
(2) Interest.— For purposes of determining interest, any payment required by subsection (a)(2) or (b)(1)(A) shall be treated as an underpayment of tax.
(3) Penalties.—
(A) In general.— In the case of any failure by any partnership to pay on the date prescribed therefor any amount required by subsection (a)(2) or (b)(1)(A), there is hereby imposed on such partnership a penalty of ten percent (10%) of the underpayment. For purposes of the preceding sentence, the term “underpayment” means the excess of any payment required under this section over the amount (if any) paid on or before the date prescribed therefor.
(B) Additions to the tax and applicable penalties.— For purposes of §§ 30351-30357 of this title, any payment required by subsection (a)(2) shall be treated as an underpayment of tax.
(d) Definitions and special rules.— For purposes of this section:
(1) Partnership adjustment.— The term “partnership adjustment” means any adjustment in the amount of any partnership item of a partnership.
(2) When adjustment takes effect.— A partnership adjustment takes effect:
(A) In the case of an adjustment pursuant to the decision of a court in a proceeding brought under §§ 33417-33423 of this title, when such decision becomes final and binding,
(B) in the case of an adjustment pursuant to any administrative adjustment request under § 33421 of this title, when such adjustment is allowed by the Secretary, or
(C) in any other case, when such adjustment is made.
(3) Adjusted year.— The term “adjusted year” means the partnership taxable year to which the item being adjusted relates.
(4) Return due date.— The term “return due date” means, with respect to any taxable year, the date prescribed for filing the partnership return for such taxable year (determined without regard to extensions).
(5) Adjustments involving changes in character.— Under regulations to be promulgated by the Secretary, appropriate adjustments in the application of this section shall be made for purposes of taking into account partnership adjustments which involve a change in the character of any item of income, gain, loss, or deduction.
(e) Payments nondeductible.— No deduction shall be allowed under §§ 30041 et seq. of this title for any payment required to be made by a partnership under this section.
History —Jan. 31, 2011, No. 1, added as § 6100.03 on Dec. 10, 2011, No. 232, § 186.