Tax Treatment Determined At Partnership Level

ID:
UILC:
CCA_2013040414572901
6221.00-00
Number: 201319027
Release Date: 5/10/2013
From:
Sent: Thursday, April 04, 2013 2:57:29 PM
To:
Cc:
Bcc:
Subject: FW: Munro calculation issue coordination
Partnership items are not assumed to be correct under the Munro computation. Instead, they are ignored as follows:
The partnership items are removed from the taxpayer Form 1040 and the deficiency is calculated as follows under CCDM 35.2.1.1.16(5):
Whenever non-TEFRA adjustments are to be made to a petitioner’s return that contains
TEFRA items and a Munro computation must be made, deficiencies shall be computed as follows: a. All TEFRA items that have been reported on the petitioner’s return shall be removed to determine the modified taxable income. b. However, if the treatment of any TEFRA item has been finally determined, e.g., by reason of a no change, a settlement or a completed TEFRA proceeding, those TEFRA items whose treatment have been finally determined shall not be removed. c. Similarly, if there is no ongoing TEFRA proceeding with respect to the TEFRA items at the time that the computation is being made, those TEFRA items shall not be removed. d. The non-TEFRA adjustments that are contained in the statutory notice (as modified in the court proceeding) will be added. The result will be the modified taxable income as corrected. e. The tax on the amount in step (a) (the modified taxable income) will be calculated. f. The tax on the amount in step (d) (the modified taxable income as corrected) will be calculated. g. The amount in step (e) will be subtracted from the amount in step (f). The difference will be the deficiency.
2
Sometimes for the purpose of a docketed non-TEFRA deficiency proceeding the parties will agree to treat the partnership items as correctly reported. But this requires that a Munro stipulation be signed agreeing that the Service may assess any remaining non-TEFRA deficiency (e.g, the bracket creep that would otherwise apply to the non-TEFRA deficiency under the CCDM Munro comp) as part of our later computational adjustment.