Exception for Small Partnerships

ID: CCA_2012041613514737 Number: 201219022
Release Date: 5/11/2012
Office: ---
UILC: 6231.01-01
From: ---
Sent: Monday, April 16, 2012 1:51:56 PM
To: ---
Cc: ---
Subject: RE: Tefra or Non Tefra?
If the S corporation elected to make its subsidiary a qualified subchapter S subsidiary under section 1361(b)(3)(B) and Treas. Reg. 1.1361-3, before the year in issue, then the subsidiary would be treated as a disregarded entity whose items are reported on the parent S corporation return. The existence of a disregarded entity as a partner takes the partnership out of the small partnership exception to TEFRA under Rev. Rul. 2004-88.