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Prompt Assessment Request By Estate Converted Partnership Items

JUL. 7, 1997

FSA 1997-49

DATED JUL. 7, 1997
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    limitations, assessments
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2000-5776 (3 original pages)
  • Tax Analysts Electronic Citation
    2000 TNT 170-44
Citations: FSA 1997-49

 

Date: July 07, 1997

 

 

Refer Reply to: CC:DOM:FS:P&SI

 

EHGreen TL-N-2403-97

 

 

INTERNAL REVENUE SERVICE MEMORANDUM

 

 

TO:

 

District Counsel, Delaware-Maryland District

 

 

ATTN:

 

Helen F. Rogers

 

 

FROM:

 

Assistant Chief Counsel (Field Service) CC:DOM:FS

 

 

SUBJECT:

 

* * * /Estate Statute of Limitations

 

Field Service Advice Request

 

 

DISCLOSURE LIMITATIONS

 

 

[1] Field Service Advice constitutes return information subject to I.R.C. section 6103. Field Service Advice contains confidential information subject to attorney-client and deliberative process privileges and if prepared in contemplation of litigation, subject to the attorney work product privilege. Accordingly, the Examination, Appeals, or Counsel recipient of this document may provide it only to those persons whose official tax administration duties with respect to this case require such disclosure. In no event may this document be provided to Examination, Appeals, Counsel, or other persons beyond those specifically indicated in this statement. Field Service Advice may not be disclosed to taxpayers or their representatives.

[2] Field Service Advice is not binding on Examination or Appeals and is not a final case determination. Such advice is advisory and does not resolve Service position on an issue or provide the basis for closing a case. The determination of the Service in the case is to be made through the exercise of the independent judgment of the Field office with jurisdiction over the case.

 

FACTS

 

 

[3] The Service is currently auditing * * *, a subchapter S Corporation, for taxable years * * *, 1 * * *, and * * *. The examination is being handled pursuant to the TEFRA partnership audit procedures.

[4] One of the shareholders in * * * died on * * *. His personal representative properly filed (use the regulations prescribed 4810 Form) a request for prompt assessment for the * * *, * * * and * * * income tax years, pursuant to I. R. C. section 6501(d). The request is dated * * *, and was received by the Philadelphia Service enter around * * *. During the week of * * *, the Atlanta Service C center rejected the estate's request for prompt assessment for * * * and for * * * (although not the * * * year), because less than 18 months remained on the limitations period for those two years. See Treas. Reg. 301.6501(d)-1(b).

 

ISSUE

 

 

[5] Whether decedent's (ie., the deceased partner) * * *, * * *, and * * * partnership items converted to nonpartnership items upon the request for prompt assessment under section 6501(d).

 

CONCLUSION

 

 

[6] Yes, decedent's * * *, * * *, and * * * partnership items converted to nonpartnership items. TEFRA partnership provisions are intended to create separate proceedings for the determination of partnership items. A partnership item, in general, is any item more appropriately determined at the partnership level than at the partner level. I.R.C. section 6231(a)(3). Designation as a partnership item is important because section 6221 of TEFRA states that the tax treatment of any partnership item is to be determined at the partnership level. Accordingly, the TEFRA audit rules apply only to those partnership items. In addition, the partnership level statute of limitations applies only to partnership items (and items directly affected by partnership items). See I.R.C. section 6229(a).

[7] The term nonpartnership item is defined in the negative. Section 6231(a)(4) states that a nonpartnership item is an item that is not a partnership item. Accordingly, the statute of limitations for nonpartnership items is not affected by TEFRA's section 6229(a) statute of limitations period. Consequently, nonpartnership items are subject to the general audit, deficiency and refund procedures of the Code, viz., section 6501(a) normal three year statute of limitations period.

[8] A converted item, in contrast, is an item which at one time was a partnership item but has been converted to a nonpartnership item due to the occurrence of certain specified events. One event that converts the partner's partnership items to nonpartnership items (see Temp. Treas. Reg. section 301. 6231(c)-8T), is when an administrator or representative of an estate properly requests a prompt assessment of a deceased partner, pursuant to section 6501(d).

[9] The language of that temporary regulation clearly provides that it is the request, and not the ultimate disposition of that request, for a prompt assessment that triggers the conversion. 2 Thus, in the instant case, the decedent's partnership items for all three years for which requests for prompt assessment were made were converted to partnership items as of the date of the requests.

[10] We note that there is a potential anomaly in the interplay between section 6501(d) and Temp. Treas. Reg. section 301.6231(c)-8T. The anomaly is that in some cases where TEFRA partnership items are involved, a request for prompt assessment will actually extend the time available for assessing instead of shortening it. This is due to the fact that it is the request, not the granting of it, which causes the conversion, and that any conversion of partnership items triggers a one year extension on the statute of limitations per section 6229(f). This anomalous result occurs only in the rare case where someone requests a prompt assessment for a taxable year for which, at the time of the request, there is already less than a 12 month period remaining on the statute of limitations. In such a case, the request will be denied (because the relief of section 6501(d) is meaningless if there are only 18 months or less to assess), the items will convert, and the 12 month cushion of section 6229(f) will automatically ensue. Strange as this result is, it is nevertheless not outside the statutory scheme because, even though the period has been extended by 12 months, the assessment will still take place within the 18 month period provided by section 6501(d).

[11] If you have any questions regarding this advice, please contact Edwin H. Green at (202) 622-7860.

DEBORAH A. BUTLER

 

 

By: WILLIAM C. SABIN, JR.

 

Senior Technician Reviewer

 

Passthroughs and Special

 

Industries Branch

 

Field Service Division

 

FOOTNOTES

 

 

1 The earliest statute, for * * * , has been extended to * * *.

2 Although it is not an issue in this case, we are inclined to read into the regulation a requirement that such a request be bona fide, i.e. such a request, in order to trigger the conversion regulation, must be made on the proper form and on behalf of a deceased person.

 

END OF FOOTNOTES
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Internal Revenue Service
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    limitations, assessments
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2000-5776 (3 original pages)
  • Tax Analysts Electronic Citation
    2000 TNT 170-44
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