(a) Definitions
For purposes of this subchapter—
(1) Partnership
(A) In general
Except as provided in subparagraph (B), the term “partnership” means any partnership required to file a return under section 6031(a).
(B) Exception for small partnerships
(i) In general
The term “partnership” shall not include any partnership having 10 or fewer partners each of whom is an individual (other than a nonresident alien), a C corporation, or an estate of a deceased partner. For purposes of the preceding sentence, a husband and wife (and their estates) shall be treated as 1 partner.
(ii) Election to have subchapter apply
A partnership (within the meaning of subparagraph (A)) may for any taxable year elect to have clause (i) not apply. Such election shall apply for such taxable year and all subsequent taxable years unless revoked with the consent of the Secretary.
(2) Partner
The term “partner” means—
(A) a partner in the partnership, and
(B) any other person whose income tax liability under subtitle A is determined in whole or in part by taking into account directly or indirectly partnership items of the partnership.
(3) Partnership item
The term “partnership item” means, with respect to a partnership, any item required to be taken into account for the partnership’s taxable year under any provision of subtitle A to the extent regulations prescribed by the Secretary provide that, for purposes of this subtitle, such item is more appropriately determined at the partnership level than at the partner level.
(4) Nonpartnership item
The term “nonpartnership item” means an item which is (or is treated as) not a partnership item.
(5) Affected item
The term “affected item” means any item to the extent such item is affected by a partnership item.
(6) Computational adjustment
The term “computational adjustment” means the change in the tax liability of a partner which properly reflects the treatment under this subchapter of a partnership item. All adjustments required to apply the results of a proceeding with respect to a partnership under this subchapter to an indirect partner shall be treated as computational adjustments.
(7) Tax matters partner
The tax matters partner of any partnership is—
(A) the general partner designated as the tax matters partner as provided in regulations, or
(B) if there is no general partner who has been so designated, the general partner having the largest profits interest in the partnership at the close of the taxable year involved (or, where there is more than 1 such partner, the 1 of such partners whose name would appear first in an alphabetical listing).
If there is no general partner designated under subparagraph (A) and the Secretary determines that it is impracticable to apply subparagraph (B), the partner selected by the Secretary shall be treated as the tax matters partner. The Secretary shall, within 30 days of selecting a tax matters partner under the preceding sentence, notify all partners required to receive notice under section 6223(a) of the name and address of the person selected.
(8) Notice partner
The term “notice partner” means a partner who, at the time in question, would be entitled to notice under subsection (a) of section 6223 (determined without regard to subsections (b)(2) and (e)(1)(B) thereof).
(9) Pass-thru partner
The term “pass-thru partner” means a partnership, estate, trust, S corporation, nominee, or other similar person through whom other persons hold an interest in the partnership with respect to which proceedings under this subchapter are conducted.
(10) Indirect partner
The term “indirect partner” means a person holding an interest in a partnership through 1 or more pass-thru partners.
(11) 5-percent group
A 5-percent group is a group of partners who for the partnership taxable year involved had profits interests which aggregated 5 percent or more.
(12) Husband and wife
Except to the extent otherwise provided in regulations, a husband and wife who have a joint interest in a partnership shall be treated as 1 person.
Enactment of Part and Repeal and Reenactment of Section
Pub. L. 114–74, title XI, § 1101(a), (c)(1), (g), Nov. 2, 2015, 129 Stat. 625, 632, 638, provided that, applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017, with certain exceptions, a new Part 1 [sic] heading “Procedure” and analysis consisting of items 6231 to 6235 are enacted, this section is repealed, and a new section 6231 following the Part 1 analysis is enacted to read as follows:
§ 6231. Notice of proceedings and adjustment
(a) In general
The Secretary shall mail to the partnership and the partnership representative—
(1) notice of any administrative proceeding initiated at the partnership level with respect to an adjustment of any item of income, gain, loss, deduction, or credit of a partnership for a partnership taxable year, or any partner’s distributive share thereof,
(2) notice of any proposed partnership adjustment resulting from such proceeding, and
(3) notice of any final partnership adjustment resulting from such proceeding.
Any notice of a final partnership adjustment shall not be mailed earlier than 270 days after the date on which the notice of the proposed partnership adjustment is mailed. Such notices shall be sufficient if mailed to the last known address of the partnership representative or the partnership (even if the partnership has terminated its existence). The first sentence shall apply to any proceeding with respect to an administrative adjustment request filed by a partnership under section 6227.
(b) Further notices restricted
If the Secretary mails a notice of a final partnership adjustment to any partnership for any partnership taxable year and the partnership files a petition under section 6234 with respect to such notice, in the absence of a showing of fraud, malfeasance, or misrepresentation of a material fact, the Secretary shall not mail another such notice to such partnership with respect to such taxable year.
(c) Authority to rescind notice with partnership consent
The Secretary may, with the consent of the partnership, rescind any notice of a partnership adjustment mailed to such partnership. Any notice so rescinded shall not be treated as a notice of a partnership adjustment for purposes of this subchapter, and the taxpayer shall have no right to bring a proceeding under section 6234 with respect to such notice.
Amendments
2002—Subsec. (b)(1)(C). Pub. L. 107–147, § 416(d)(1)(C), inserted “or the Attorney General (or his delegate)” after “Secretary”.
Subsec. (b)(2)(B)(i). Pub. L. 107–147, § 417(19)(C), substituted “section 6227(d)” for “section 6227(c)”.
1998—Subsec. (a)(7). Pub. L. 105–206 inserted at end “The Secretary shall, within 30 days of selecting a tax matters partner under the preceding sentence, notify all partners required to receive notice under section 6223(a) of the name and address of the person selected.”
1997—Subsec. (a)(1)(B)(i). Pub. L. 105–34, § 1234(a), reenacted heading of cl. (i) without change and amended text generally. Prior to amendment, text read as follows: “The term ‘partnership’ shall not include any partnership if—
“(I) such partnership has 10 or fewer partners each of whom is a natural person (other than a nonresident alien) or an estate, and
“(II) each partner’s share of each partnership item is the same as his share of every other item.
For purposes of the preceding sentence, a husband and wife (and their estates) shall be treated as 1 partner.”
Subsec. (f). Pub. L. 105–34, § 1141(b), substituted “deductions, losses, and” for “losses and” in subsec. heading and “deduction, loss, or” for “loss or” in two places in text.
Subsec. (g). Pub. L. 105–34, § 1232(a), added subsec. (g).
1984—Subsec. (a)(9). Pub. L. 98–369, § 714(p)(2)(B), substituted “S corporation” for “electing small business corporation”.
Subsec. (b)(2)(B). Pub. L. 98–369, § 714(p)(2)(I), substituted section “6227(c)” for “6227(b)”.
Subsec. (d)(1)(A). Pub. L. 98–369, § 714(p)(2)(C), amended subpar. (A) generally, substituting “disposed of” and “disposition” for “liquidated, sold, or exchanged” and “liquidation, sale, or exchange”, respectively.
Subsec. (f). Pub. L. 98–369, § 714(p)(2)(D), substituted “such loss or credit” for “such deduction or credit”.
Effective Date of Repeal and Reenactment
Repeal and reenacted section applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017, with certain exceptions, see section 1101(g) of Pub. L. 114–74, set out as an Effective Date of 2015 Amendment note under section 6221 of this title.
Effective Date of 2002 Amendment
Amendment by section 416(d)(1)(C) of Pub. L. 107–147 applicable with respect to settlement agreements entered into after Mar. 9, 2002, see section 416(d)(2) of Pub. L. 107–147, set out as a note under section 6224 of this title.
Effective Date of 1998 Amendment
Pub. L. 105–206, title III, § 3507(b), July 22, 1998, 112 Stat. 772, provided that:
“The amendment made by this section [amending this section] shall apply to selections of tax matters partners made by the Secretary of the Treasury after the date of the enactment of this Act [July 22, 1998].”
Effective Date of 1997 Amendment
Amendment by section 1141(b) of Pub. L. 105–34 applicable to taxable years beginning after Aug. 5, 1997, see section 1141(c) of Pub. L. 105–34, set out as a note under section 6031 of this title.
Pub. L. 105–34, title XII, § 1232(b), Aug. 5, 1997, 111 Stat. 1023, provided that:
“The amendment made by this section [amending this section] shall apply to partnership taxable years ending after the date of the enactment of this Act [Aug. 5, 1997].”
Pub. L. 105–34, title XII, § 1234(b), Aug. 5, 1997, 111 Stat. 1024, provided that:
“The amendment made by this section [amending this section] shall apply to partnership taxable years ending after the date of the enactment of this Act [Aug. 5, 1997].”
Effective Date of 1984 Amendment
Amendment by Pub. L. 98–369 effective as if included in the provision of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97–248, to which such amendment relates, see section 715 of Pub. L. 98–369, set out as a note under section 31 of this title.
Special Rule for Certain International Satellite Partnerships
Pub. L. 97–248, title IV, § 406, Sept. 3, 1982, 96 Stat. 670, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
“Subchapter C of chapter 63 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to tax treatment of partnership items), section 6031 of such Code (relating to returns of partnership income), and section 6046A of such Code (relating to returns as to interest in foreign partnerships) shall not apply to the International Telecommunications Satellite Organization, the International Maritime Satellite Organization, and any organization which is a successor of either of such organizations.”