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Partnerships

IRS withdraws old, issues new, proposed partnership audit regs

Proposed Regs, Centralized Partnership Audit Regime

IRS has withdrawn certain portions of proposed regs implementing the centralized partnership audit regime that have not been finalized to reflect the changes made by the Technical Corrections Act of 2018; the changes were contained in Title II of the Consolidated Appropriations Act of 2018 (TTCA). IRS also issued new proposed regs reflecting the technical corrections made by the TTCA.

Background. A new centralized partnership audit regime was enacted as part of the Bipartisan Budget Act of 2015 (BBA). The new regime added a new subchapter C to chapter 63 of the Code. Generally effective for tax years beginning after Dec. 31, 2017, §1101 of the BBA repealed the previous (“TEFRA”) partnership procedures and the existing rules applicable to electing large partnerships, replacing them with the new regime. However, partnerships were allowed to elect to have most of the new partnership audit regime apply to returns of the partnership filed for partnership tax years beginning after Nov. 2, 2015 (i.e., the BBA’s enactment date) and before Jan. 1, 2018.

Old proposed regs withdrawn, new ones proposed.  IRS has now withdrawn certain old centralized partnership proposed regs and issued new ones.

The new proposed regs also include clarifications, unrelated to the TTCA.

Checkpoint will provide additional information about the regs in a future Federal Tax Update.

References: For the post-2017 partnership audit rules, see FTC 2d/FIN ¶ T-2400 et seq.; United States Tax Reporter ¶ 62,214.12 et seq.

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