26 U.S. Code § 6231 - Definitions and special rules
Except as provided in subparagraph (B), the term “partnership” means any partnership required to file a return under section 6031(a).
The term “partnership” shall not include any partnership having 10 or fewer partners each of whom is an individual (other than a nonresident alien), a C corporation, or an estate of a deceased partner. For purposes of the preceding sentence, a husband and wife (and their estates) shall be treated as 1 partner.
The term “partnership item” means, with respect to a partnership, any item required to be taken into account for the partnership’s taxable year under any provision of subtitle A to the extent regulations prescribed by the Secretary provide that, for purposes of this subtitle, such item is more appropriately determined at the partnership level than at the partner level.
The term “nonpartnership item” means an item which is (or is treated as) not a partnership item.
The term “affected item” means any item to the extent such item is affected by a partnership item.
The term “computational adjustment” means the change in the tax liability of a partner which properly reflects the treatment under this subchapter of a partnership item. All adjustments required to apply the results of a proceeding with respect to a partnership under this subchapter to an indirect partner shall be treated as computational adjustments.
The term “notice partner” means a partner who, at the time in question, would be entitled to notice under subsection (a) of section 6223 (determined without regard to subsections (b)(2) and (e)(1)(B) thereof).
The term “pass-thru partner” means a partnership, estate, trust, S corporation, nominee, or other similar person through whom other persons hold an interest in the partnership with respect to which proceedings under this subchapter are conducted.
The term “indirect partner” means a person holding an interest in a partnership through 1 or more pass-thru partners.
A 5-percent group is a group of partners who for the partnership taxable year involved had profits interests which aggregated 5 percent or more.
Any notice to a partner under subparagraph (A) of paragraph (1) with respect to partnership items for a partnership taxable year shall be mailed before the day on which the Secretary mails to the tax matters partner a notice of the beginning of an administrative proceeding at the partnership level with respect to such items.
To the extent that the Secretary determines and provides by regulations that to treat items as partnership items will interfere with the effective and efficient enforcement of this title in any case described in paragraph (1), such items shall be treated as nonpartnership items for purposes of this subchapter.
Except to the extent otherwise provided in regulations, in the case of any partnership the tax matters partner of which resides 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 in which such deduction, loss, or credit arose at such time as the Secretary prescribes by regulations.
If, on the basis of a partnership return for a taxable year, the Secretary reasonably determines that this subchapter applies to such partnership for such year but such determination is erroneous, then the provisions of this subchapter are hereby extended to such partnership (and its items) for such taxable year and to partners of such partnership.
If, on the basis of a partnership return for a taxable year, the Secretary reasonably determines that this subchapter does not apply to such partnership for such year but such determination is erroneous, then the provisions of this subchapter shall not apply to such partnership (and its items) for such taxable year or to partners of such partnership.
Pub. L. 114–74, title XI, § 1101(a), (c)(1), (g), Nov. 2, 2015, 129 Stat. 625, 632, 638, provided that, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017, with certain exceptions, a new Part 1 [sic] heading “Procedure” and analysis consisting of items 6231 to 6235 are enacted, this section is repealed, and a new section 6231 following the Part 1 analysis is enacted to read as follows:
§ 6231. Notice of proceedings and adjustment
(a) In general
The Secretary shall mail to the partnership and the partnership representative—
(1) notice of any administrative proceeding initiated at the partnership level with respect to an adjustment of any item of income, gain, loss, deduction, or credit of a partnership for a partnership taxable year, or any partner’s distributive share thereof,
(2) notice of any proposed partnership adjustment resulting from such proceeding, and
(3) notice of any final partnership adjustment resulting from such proceeding.
Any notice of a final partnership adjustment shall not be mailed earlier than 270 days after the date on which the notice of the proposed partnership adjustment is mailed. Such notices shall be sufficient if mailed to the last known address of the partnership representative or the partnership (even if the partnership has terminated its existence). The first sentence shall apply to any proceeding with respect to an administrative adjustment request filed by a partnership under section 6227.
(b) Further notices restricted
If the Secretary mails a notice of a final partnership adjustment to any partnership for any partnership taxable year and the partnership files a petition under section 6234 with respect to such notice, in the absence of a showing of fraud, malfeasance, or misrepresentation of a material fact, the Secretary shall not mail another such notice to such partnership with respect to such taxable year.
(c) Authority to rescind notice with partnership consent
The Secretary may, with the consent of the partnership, rescind any notice of a partnership adjustment mailed to such partnership. Any notice so rescinded shall not be treated as a notice of a partnership adjustment for purposes of this subchapter, and the taxpayer shall have no right to bring a proceeding under section 6234 with respect to such notice.
2002—Subsec. (b)(1)(C). Pub. L. 107–147, § 416(d)(1)(C), inserted “or the Attorney General (or his delegate)” after “Secretary”.
Subsec. (b)(2)(B)(i). Pub. L. 107–147, § 417(19)(C), substituted “section 6227(d)” for “section 6227(c)”.
1998—Subsec. (a)(7). Pub. L. 105–206 inserted at end “The Secretary shall, within 30 days of selecting a tax matters partner under the preceding sentence, notify all partners required to receive notice under section 6223(a) of the name and address of the person selected.”
1997—Subsec. (a)(1)(B)(i). Pub. L. 105–34, § 1234(a), reenacted heading of cl. (i) without change and amended text generally. Prior to amendment, text read as follows: “The term ‘partnership’ shall not include any partnership if—
“(I) such partnership has 10 or fewer partners each of whom is a natural person (other than a nonresident alien) or an estate, and
“(II) each partner’s share of each partnership item is the same as his share of every other item.
For purposes of the preceding sentence, a husband and wife (and their estates) shall be treated as 1 partner.”
Subsec. (f). Pub. L. 105–34, § 1141(b), substituted “deductions, losses, and” for “losses and” in subsec. heading and “deduction, loss, or” for “loss or” in two places in text.
Subsec. (g). Pub. L. 105–34, § 1232(a), added subsec. (g).
1984—Subsec. (a)(9). Pub. L. 98–369, § 714(p)(2)(B), substituted “S corporation” for “electing small business corporation”.
Subsec. (b)(2)(B). Pub. L. 98–369, § 714(p)(2)(I), substituted section “6227(c)” for “6227(b)”.
Subsec. (d)(1)(A). Pub. L. 98–369, § 714(p)(2)(C), amended subpar. (A) generally, substituting “disposed of” and “disposition” for “liquidated, sold, or exchanged” and “liquidation, sale, or exchange”, respectively.
Subsec. (f). Pub. L. 98–369, § 714(p)(2)(D), substituted “such loss or credit” for “such deduction or credit”.
Repeal applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017, with certain exceptions, see section 1101(g) of Pub. L. 114–74, set out as an Effective Date of 2015 Amendment note under section 6221 of this title.
Amendment by section 416(d)(1)(C) of Pub. L. 107–147 applicable with respect to settlement agreements entered into after Mar. 9, 2002, see section 416(d)(2) of Pub. L. 107–147, set out as a note under section 6224 of this title.
Amendment by Pub. L. 98–369 effective as if included in the provision of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97–248, to which such amendment relates, see section 715 of Pub. L. 98–369, set out as a note under section 31 of this title.
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