PROCEDURALLY TAXING tax notes federal
by Jenni Black Jenni Black is a managing director in Citrin Cooperman’s national tax office and the practice leader of the tax procedure and controversy practice. Jenni is also a contributing author for Procedurally Taxing. In this post, Black examines the interaction between the alternative minimum tax and the additional reporting year tax when computing a partner’s total chapter 1 tax for the reporting year, in situations in which the partnership has made an election to push out the adjustments to its partners under the centralized partnership audit regime enacted by the Bipartisan Budget Act of 2015. This post reflects the author’s personal views and not necessarily those of Citrin Cooperman. Welcome back to “B-B-A, easy as A-M-T.” Part 1 of the article discussed how a partner’s tax is impacted if the partnership elects to push out the adjustments to its reviewed year partners. Part 1 also discussed how the alternative minimum tax is calculated. In part 2 of this article, I put those two things together and discuss how the additional reporting year tax fits into the overall calculation of the partner’s chapter 1 tax for the reporting year. It’s as simple as do-re-mi. What is the additional reporting year tax? Is it a tax imposed by chapter 1 of the Internal Revenue Code? Well, let’s look at that. The code section that creates the liability is section 6226 (or section 6227) because it imposes liability on partners if the partnership elects to push out the adjustments. Sections 6226 and 6227 are not in chapter 1; they are in subchapter C of chapter 63 in subtitle F.
Does that make it a tax under subtitle F? While section 6226 (and section 6227) imposes tax liability on the partners if the partnership elects to push out, the amount of tax is not calculated under subtitle F; it’s calculated under chapter 1, and it adjusts tax under chapter 1. Under section 6232, the imputed underpayment (IU) is assessed and collected against the partnership “as if it were” a tax under subtitle A (income taxes). Similarly, section 6233(a)(3) provides that penalties on a partnership under the Bipartisan Budget Act of 2015 are calculated “as if” the partnership was an individual subject to chapter 1 tax and the IU is an actual underpayment or understatement of tax. The partnership’s liability for the IU is also created under subchapter C of chapter 63 of subtitle F, not subtitle A where income taxes are located. But the IU is calculated under section 6225, not chapter 1. The statutes refer to the IU as being treated “as if” it were a tax under subtitle A, not that it actually is a tax under subtitle A; so the IU is not an income tax, it’s just assessed and collected as if it were an income tax. It only follows the rules for chapter 1 taxes when it comes to penalty calculations and assessment and collection. Section 6226 (and section 6227) do not contain the same “as if” language. Section 6226(b) states that the partner’s “tax imposed by chapter 1” for the tax year is adjusted (section 6227 uses rules “similar to the rules of section 6226”). If the additional reporting year tax adjusts chapter 1 tax, it would seem to be part of chapter 1 tax, right? After all, that’s how other adjustments to items work. If the IRS adjusts a taxpayer’s ordinary income by $100, the $100 adjustment to ordinary income is ordinary income, not something entirely different. Why does this matter? If the additional reporting year tax is a “tax imposed by chapter 1,” then it is part of “regular tax liability” because it’s not excluded. But the
TAX NOTES FEDERAL, VOLUME 190, FEBRUARY 2, 2026 For more Tax Notes® Federal content, please visit www.taxnotes.com.
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B-B-A, Easy as A-M-T, Part 2