How Not to Get Crushed By Income Tax Collections from a Partnership (Currently Unavailable)

Author: Bradley Burnett

Centralized Partnership IRS Audit Rules (CPAR): Every Partnership (and LLC) Must Make a Stand and Other Freight Train Stories

Effective in 2018 (coming like a freight train), TEFRA partnership IRS audit rules are axed and a whole new regime kicks in. Partnerships may now be liable for income tax at 37%. IRS exams of partnerships will increase and become much more deadly. Do these new “tax procedure” rules spell the beginning of the end for partnerships as we know them? Escape routes are available, but not for all. Advance planning is a must to avoid train wrecks of colossal proportion.

Publication Date: January 2019

Designed For
Anyone who works with partnerships from a planning or compliance perspective. Anyone who owns a partnership interest and cares to not be devastated by IRS’ extraordinarily broad new powers.

Topics Covered

• IRS Audit Stats
• IRS's Struggle to Audit Tiered Partnerships
• IRS' Problem / Congress' Solution
• Centralized Partnership Audit Rules (CPAR)
• Prior Law: 3 Partnership Audit Regimes
• CPAR Replaces 3 Audit Regimes With 1
• CPAR Roadmap
• Effect of New CPAR Rules
• CPAR — Default Rule
• CPAR — Example of 2018 Audit
• CPAR — Highway and Exit Ramps
• Imputed Underpayment — End of the Highway
• Imputed Underpayment — Avoid it like the plague (almost every time)
• Exit Ramp 1: Partnership "Elects Out" of CPAR
• Exit Ramp 2: Partners "Amend Out" or "Pull In"
• Exit Ramp 3: Partnership Elects "Push Out"
• Modification of Imputed Underpayment
• Imputed Underpayment ” Modification
• CPAR Highway — Flow of Procedure
• Partnership Representative
• Agreements Affected by CPAR
• State Conformity (or Not) with CPAR
• Appendix: State Conformity (or Not) with CPAR

Learning Objectives

• Recognize how to advise partnerships to posture to sidestep and mitigate the harsh new effect of IRS dramatically broadened audit powers
• Identify how to prevent a partnership (or LLC) from becoming a strange new beast taxed at least in part as a C corporation
• Describe correct statements regarding IRS Audit statistics related to partnerships
• Differentiate how the new Centralized Partnership Audit Rules (CPAR) apply
• Describe which IRS form an entity which seeks to elect out of the CPAR requirements entirely may do so
• Identity correct statements with respect to CPAR requirements
• Recognize how to prepare for CPAR
• Recognize advantages to a partnership of the "amend out" or "pull in"
• Differentiate between the "amend out" or "pull in" procedure exit ramps
• Identify each of the exit ramps with respect to CPAR requirements
• Identify IRS Audit Stats and how they apply to partnerships
• Describe imputed underpayment if a partnership elects out of CPAR
• Recognize what happens if a partner elects the amend out procedure
• Identify a characteristic of an intervening year

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (3 hours)

Program Prerequisites
None

Advance Preparation
None