Similar Rules in Certain Cases

ID:
Office:
UILC:
CCA_2009092409455137
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6233.02-00
Number: 200945067
Release Date: 11/6/2009
From: ---
Sent: Thursday, September 24, 2009 9:45:56 AM
To: ---
Cc: ---
Subject: RE: Is this a tefra partnership?
You should protect the statute both ways (TEFRA and Non-TEFRA), but this is most like subject to
TEFRA. Section 6233(b) provides that TEFRA is mandatory if a partnership return is filed even if no partnership is ultimately found to exist. The only exception is if the small partnership exception applies.
The existence of a pass-thru partner (the trust) makes this exception inapplicable. So TEFRA applies.
Furthermore, you don't need a profits interest to be a partner if you have a capital interest. If the trust actually contributed property and has a right to capital appreciation, it would meet the definition of a partner under the Supreme Court tests in Culbertson and Tower. Your facts do not indicate whether this is the case.
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