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. In this post, Black considers what happens if a partner in a Bipartisan Budget Act of 2015 partnership reports inconsistently from the partnership without filing a notice of inconsistent treatment. This post reflects the author’s personal views and not necessarily those of Citrin Cooperman. One of the key features of the centralized partnership audit regime enacted by the Bipartisan Budget Act of 2015 is that partners must report partnership-related items (PRIs) on their returns consistent with how the partnership treated those same PRIs. This means the partner must report the item in the same amount, character, and timing as the partnership. This concept is not new. Partners in partnerships subject to the Tax Equity and Fiscal Responsibility Act of 1982 also, under rules nearly identical to section 6222 (as amended by the BBA), had to report the partnership’s items consistent with how the partnership treated the items and, under section 6037(c), shareholders in S corporations must report the items of an S corporation consistent with how the S corporation treated the items. The partner may file inconsistently with the partnership if the partner notifies the IRS by attaching Form 8082, “Notice of Inconsistent
Treatment or Administrative Adjustment Request (AAR),” to their return. In my prior article, “To Be or Not to Be — Inconsistent Treatment Under BBA,” I discussed what happens if a partner files inconsistently from the partnership, issues with indirect partners, and the limits on what a partner can treat inconsistently (Tax Notes Federal, Jan. 13, 2025, p. 331). In this two-part article, I go into the unexplored wilds of BBA to ponder some uncertain areas when it comes to inconsistent treatment under BBA. What happens if a passthrough partner1 reports inconsistently from the BBA partnership and does not file a notice of inconsistent treatment? Does it matter whether the adjustments result in an imputed underpayment (IU) or not? I’m not promising to have all the answers here, but I hope you’ll enjoy my academic adventure into the things that make 2 you go “hmmmm” in BBA. Pass-Through Partners Under BBA, if a partner treats PRIs on the partner’s return differently than how the partnership treated those same PRIs, the IRS may adjust the inconsistently reported items on the partner’s return to be consistent with the partnership and assess any additional tax as a result of that change in the same manner as if the tax was from a mathematical or clerical error appearing on the return (that is, without issuing a statutory notice of deficiency) unless the partner attaches a Form 8082 to their return to notify the IRS of the inconsistency. But what happens if the
1 2
As defined in reg. section 301.6241-1(a)(5). My apologies to C+C Music Factory.
TAX NOTES FEDERAL, VOLUME 188, SEPTEMBER 1, 2025 For more Tax Notes® Federal content, please visit www.taxnotes.com.
1483
© 2025 Tax Analysts. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content.
Inconsistently Inconsistent: Open Questions On Inconsistent Treatment Under BBA