DOC 2024-32385
Demystifying Administrative Adjustment Requests 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. She has over two decades of combined legal and accounting experience and has extensive experience dealing with complex tax issues, including partnership audit procedures under the Tax Equity and Fiscal Responsibility Act of 1982 and the Bipartisan Budget Act of 2015. In this post, Black provides tips for reporting adjustments on administrative adjustment requests and locating all the adjustments
JENNI BLACK
the partnership is making, and she explores whether some changes to partnership returns are, in fact, adjustments to partnershiprelated items.
The centralized partnership audit regime enacted by the Bipartisan Budget Act of 2015 created a new way to adjust items on a partnership return. Under the BBA (like its predecessor under the Tax Equity and Fiscal Responsibility Act of 1982), adjustments to partnership-related items (PRIs) are made at the partnership level. A PRI is any item or amount that: (1) is on (or required to be on) the Form 1065, “U.S. Return of Partnership Income,” filed by the partnership or required to be maintained in the partnership’s books and records; and (2) is relevant to determining the tax liability of any person under chapter 1, regardless of whether the item or amount has an actual effect on the tax liability of any person. Reg. section 301.6241-1(a)(6). Under this broad definition, nearly every item on the Form 1065 is a PRI, including balance sheet items such as the partnership’s assets and liabilities. Reg. section 301.6241-1(a)(6)(v) contains a list of examples of PRIs which include things such as the character, timing, source, and amount of the partnership’s income, gain, loss, deduction, or credit, and the amount and character of partnership liabilities. In my prior post I discussed why it’s important to know what adjustments are included in an administrative adjustment request (AAR) and the ways the IRS can adjust an AAR (both the adjustments in the AAR and any imputed underpayment (IU) calculated by the partnership). In this post I hope to expand on this and get more into practical considerations, including how to report adjustments on an AAR and tips on how to make sure you’ve located all the adjustments the partnership is making. Finally, I will explore whether some changes to the partnership return are, in fact, adjustments to PRIs. Now that we’ve figured out what the adjustments are, let’s discuss how to report those adjustments on an AAR.
Pages 1 of 5
(C) Tax Analysts 2024. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content.
Posted on Nov. 12, 2024