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Internal Revenue Code, § 6227. Administrative Adjustment Requests By Partnership

Editor's Note: Pub. L. 114-74, Sec. 1101(c)(1), added, and Pub. L. 115-141, Div. U, title II, amended, Sec. 6227, below, generally effective for requests with respect to returns filed for partnership taxable years beginning after December 31, 2017; however, Act Sec. 1101(g)(4) provides that partnerships may elect the amendments made by Act Sec. 1101 (other than the election under Code Sec. 6221(b)) to apply to any return of the partnership filed for partnership taxable years beginning after Nov. 2, 2015, and before Jan. 1, 2018. For the previous version, which was struck by Pub. L. 114-74, Sec. 1101(a), see the Code History, below.
I.R.C. § 6227(a) In General
Editor's Note: Pub. L. 114-74, Sec. 1101(c)(1), added, and Pub. L. 115-141, Div. U, title II, amended, Sec. 6227, below, generally effective for requests with respect to returns filed for partnership taxable years beginning after December 31, 2017; however, Act Sec. 1101(g)(4) provides that partnerships may elect the amendments made by Act Sec. 1101 (other than the election under Code Sec. 6221(b)) to apply to any return of the partnership filed for partnership taxable years beginning after Nov. 2, 2015, and before Jan. 1, 2018. For the previous version, which was struck by Pub. L. 114-74, Sec. 1101(a), see the Code History, below.
A partnership may file a request for an administrative adjustment in the amount of one or more partnership-related items for any partnership taxable year.
I.R.C. § 6227(b) Adjustment
Editor's Note: Pub. L. 114-74, Sec. 1101(c)(1), added, and Pub. L. 115-141, Div. U, title II, amended, Sec. 6227, below, generally effective for requests with respect to returns filed for partnership taxable years beginning after December 31, 2017; however, Act Sec. 1101(g)(4) provides that partnerships may elect the amendments made by Act Sec. 1101 (other than the election under Code Sec. 6221(b)) to apply to any return of the partnership filed for partnership taxable years beginning after Nov. 2, 2015, and before Jan. 1, 2018. For the previous version, which was struck by Pub. L. 114-74, Sec. 1101(a), see the Code History, below.
Any such adjustment under subsection (a) shall be determined and taken into account for the partnership taxable year in which the administrative adjustment request is filed—
I.R.C. § 6227(b)(1)
by the partnership under rules similar to the rules of section 6225 (other than paragraphs (2), (7) and (9) of subsection (c) thereof) for the partnership taxable year in which the administrative adjustment request is filed, or
I.R.C. § 6227(b)(2)
by the partnership and partners under rules similar to the rules of section 6226 (determined without regard to the substitution described in subsection (c)(2)(C) thereof).
In the case of an adjustment that would not result in an imputed underpayment, paragraph (1) shall not apply and paragraph (2) shall apply with appropriate adjustments.
I.R.C. § 6227(c) Period Of Limitations
Editor's Note: Pub. L. 114-74, Sec. 1101(c)(1), added Sec. 6227, below, generally effective for requests with respect to returns filed for partnership taxable years beginning after December 31, 2017; however, Act Sec. 1101(g)(4) provides that partnerships may elect the amendments made by Act Sec. 1101 (other than the election under Code Sec. 6221(b)) to apply to any return of the partnership filed for partnership taxable years beginning after Nov. 2, 2015, and before Jan. 1, 2018. For the previous version, which was struck by Pub. L. 114-74, Sec. 1101(a), see the Code History, below.
A partnership may not file such a request more than 3 years after the later of—
I.R.C. § 6227(c)(1)
the date on which the partnership return for such year is filed, or
I.R.C. § 6227(c)(2)
the last day for filing the partnership return for such year (determined without regard to extensions).
In no event may a partnership file such a request after a notice of an administrative proceeding with respect to the taxable year is mailed under section 6231.
I.R.C. § 6227(d) Coordination With Adjustments Related To Foreign Tax Credits
Editor's Note:  Pub. L. 115-141, Div. U, Sec. 206(f), added subsec. (d), generally effective for requests with respect to returns filed for partnership taxable years beginning after December 31, 2017.
The Secretary shall issue regulations or other guidance which provide for the proper coordination of this section and section 905(c).
(Added by Pub. L. 97-248, title IV, 402(a), Sept. 3, 1982, 96 Stat. 655; amended by Pub. L. 105-34, title XII, Sec. 1236(a), 1243(a), Aug. 5, 1997, 111 Stat 788; Pub. L. 107-147, title IV, Sec. 417(19), Mar. 9, 2002, 116 Stat. 21; repealed by Pub. L. 114-74, title XI, Sec. 1101(a); added by Pub. L. 114-74, title XI, Sec. 1101(c)(1); amended by Pub. L. 115-141, Div. U, title II, Sec. 201(c)(5), 206(f), (p)(2), (3), Mar. 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018 — Subsec. (a). Pub. L. 115-141, Div. U, Sec. 201(c)(5), amended subsec. (a) by substituting “partnership-related items” for “items of income, gain, loss, deduction, or credit of the partnership”.
Subsec. (b). Pub. L. 115-141, Div. U, Sec. 206(p)(2), amended subsec. (b) by substituting “is filed” for “is made” both places it appeared.
Subsec. (b)(1). Pub. L. 115-141, Div. U, Sec. 206(p)(3), amended par. (1) by substituting “paragraphs (2), (7), and (9)” for “paragraphs (2), (6), and (7)”.
Subsec. (d). Pub. L. 115-141, Div. U, Sec. 206(f), added subsec. (d).
2015 - Pub. L. 114-74, Sec. 1101(a), repealed Sec. 6227 and added a new Sec. 6227. Before being repealed, it read as follows:
“Sec. 6227. Administrative Adjustment Requests
“(a) General Rule.—A partner may file a request for an administrative adjustment of partnership items for any partnership taxable year at any time which is—
“(1) within 3 years after the later of—
“(A) the date on which the partnership return for such year is filed, or
“(B) the last day for filing the partnership return for such year (determined without regard to extensions), and
“(2) before the mailing to the tax matters partner of a notice of final partnership administrative adjustment with respect to such taxable year.
“(b) Special Rule In Case Of Extension Of Period Of Limitations Under Section 6229.—The period prescribed by subsection (a)(1) for filing of a request for an administrative adjustment shall be extended--
“(1) for the period within which an assessment may be made pursuant to an agreement (or any extension thereof) under section 6229(b), and
“(2) for 6 months thereafter.
“(c) Requests By Tax Matters Partner On Behalf Of Partnership.—
‘(1) Substituted Return.—If the tax matters partner—
“(A) files a request for an administrative adjustment, and
“(B) asks that the treatment shown on the request be substituted for the treatment of partnership items on the partnership return to which the request relates,
“the Secretary may treat the changes shown on such request as corrections of mathematical or clerical errors appearing on the partnership return.
“(2) Requests Not Treated As Substituted Returns.—
“(A) In General.—If the tax matters partner files an administrative adjustment request on behalf of the partnership which is not treated as a substituted return under paragraph (1), the Secretary may, with respect to all or any part of the requested adjustments—
“(i) without conducting any proceeding, allow or make to all partners the credits or refunds arising from the requested adjustments,
“(ii) conduct a partnership proceeding under this subchapter, or
“(iii) take no action on the request.
“(B) Exceptions.—Clause (i) of subparagraph (A) shall not apply with respect to a partner after the day on which the partnership items become nonpartnership items by reason of 1 or more of the events described in subsection (b) of section 6231.
“(3) Request Must Show Effect On Distributive Shares.—The tax matters partner shall furnish with any administrative adjustment request on behalf of the partnership revised schedules showing the effect of such request on the distributive shares of the partners and such other information as may be required under regulations.
“(d) Other Requests.—If any partner files a request for an administrative adjustment (other than a request described in subsection (c)), the Secretary may—
“(1) process the request in the same manner as a claim for credit or refund with respect to items which are not partnership items,
“(2) assess any additional tax that would result from the requested adjustments,
“(3) mail to the partner, under subparagraph (A) of section 6231(b)(1) (relating to items becoming nonpartnership items), a notice that all partnership items of the partner for the partnership taxable year to which such request relates shall be treated as nonpartnership items, or
“(4) conduct a partnership proceeding.
“(e) Requests With Respect To Bad Debts Or Worthless Securities.—In the case of that portion of any request for an administrative adjustment which relates to the deductibility by the partnership under section 166 of a debt as a debt which became worthless, or under section 165(g) of a loss from worthlessness of a security, the period prescribed in subsection (a)(1) shall be 7 years from the last day for filing the partnership return for the year with respect to which such request is made (determined without regard to extensions).”
2002 - Subsec. (d). Pub. L. 107-147, Sec. 417(19), amended subsec. (d) by substituting “subsection (c)” for “subsection (b)”.
1997 - Subsec. (b)-(c). Pub. L. 105-34, Sec. 1236(a), redesignated subsecs. (b) and (c) as subsecs. (c) and (d), respectively, and added a new subsec. (b).
Subsec. (e). Pub. L. 105-34, Sec. 1243(a), added subsec. (e).
EFFECTIVE DATE OF 2018 AMENDMENTS
Amendments by Pub. L. 115-141, Div. U, title II, effective as if included in section 1101 of the Bipartisan Budget Act of 2015 [Pub. L. 114-74].
EFFECTIVE DATE OF 2015 AMENDMENT AND REPEAL
Pub. L. 114-74, Sec. 1101(g) provided:
“(g) EFFECTIVE DATE.—
“(1) IN GENERAL.— Except as otherwise provided in this subsection, the amendments made by this section shall apply to returns filed for partnership taxable years beginning after December 31, 2017. “(2) ADMINISTRATIVE ADJUSTMENT REQUESTS.— In the case of administrative adjustment request under section 6227 of such Code, the amendments made by this section shall apply to requests with respect to returns filed for partnership taxable years beginning after December 31, 2017.
“(3) ADJUSTED PARTNERS STATEMENTS.— In the case of a partnership electing the application of section 6226 of such Code, the amendments made by this section shall apply to elections with respect to returns filed for partnership taxable years beginning after December 31, 2017.
“(4) ELECTION.— A partnership may elect (at such time and in such form and manner as the Secretary of the Treasury may prescribe) for the amendments made by this section (other than the election under section 6221(b) of such Code (as added by this Act)) to apply to any return of the partnership filed for partnership taxable years beginning after the date of the enactment of this Act [Enacted: Nov. 2, 2015] and before January 1, 2018.”
EFFECTIVE DATE OF 2002 AMENDMENT
Amendment by Sec. 417(19) of Pub. L. 107-147 effective on the date of the enactment of this Act [enacted: Mar. 9, 2002].
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendments by Sec. 1236(a) of Pub. L. 105-34 effective as if included in the amendments made by section 402 of the Tax Equity and Fiscal Responsibility Act of 1982.
Amendment by Sec. 1243(a) of Pub. L. 105-34 effective as if included in the amendments made by section 402 of the Tax Equity and Fiscal Responsibility Act of 1982. Sec. 1243(b)(2) of Pub. L. 105-34 provided the following special rule:
“(2) Treatment of requests filed before date of enactment.--In the case of that portion of any request (filed before the date of the enactment of this Act) for an administrative adjustment which relates to the deductibility of a debt as a debt which became worthless or the deductibility of a loss from the worthlessness of a security--
(A) paragraph (2) of section 6227(a) of the Internal Revenue Code of 1986 shall not apply,
(B) the period for filing a petition under section 6228 of the Internal Revenue Code of 1986 with respect to such request shall not expire before the date 6 months after the date of the enactment of this Act, and
(C) such a petition may be filed without regard to whether there was a notice of the beginning of an administrative proceeding or a final partnership administrative adjustment.”