DOC 2025-14379
Posted on May 12, 2025 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. In this post, Black examines complications that may arise in tiered partnerships when allocating adjustments in a push out election.
JENNI BLACK
Under the centralized partnership audit regime enacted by the Bipartisan Budget Act of 2015, any adjustments to partnership-related items (PRIs) must be determined, and any tax attributable to those adjustments must be assessed and collected, at the partnership level, unless BBA provides for an exception.1 One of the exceptions to when the tax attributable to partnership adjustments must be assessed and collected at the partnership level is if the partnership makes an election under section 6226 (or section 6227 in the case of administrative adjustment requests (AARs)) to “push out” the adjustments to its partners from the reviewed year.2 In part one of my article, I discussed allocating adjustments to partners on push out statements and what “in the same manner” means.3 In this part, I discuss why any of this matters, complications that may arise in tiered partnerships, and what happens if the pushed-out adjustments would change as they flowed through the tiers based on the facts and circumstances of upper-tier partnerships.
Why Does This Matter? Before we get to that potential complication I promised you in part one of this article, let’s discuss why any of this matters. You might be thinking to yourself, “It’s not clear, that’s fine; if it’s an audit, I’ll just ask the IRS to determine the allocations as part of the adjustments and if it’s an AAR, I will just make the changes as reallocation adjustments. Ambiguity avoided.” And you would be right — for the source partnership.
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Chasing Waterfalls: Allocating Adjustments in a Push Out Election, Part 2