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Perhaps a practitioner is faced with an error on a previously filed partnership return, or a partner disagrees with the treatment of a certain item in the partnership return originally filed. Many tax practitioners may not fully appreciate the distinctions between amending partnership returns and other returns, and the consequences of making such a filing. Both of these aspects should receive careful consideration before the filing is made.
Under Sec. 6227, special rules are provided for "amending" partnership returns. In fact, an "amended return" is not filed; rather, a "request for administrative adjustment" (RAA) is filed. The partnership RAA is the equivalent of an amended return and is used to change the treatment of partnership items from the manner in which they were treated on the partnership return. These provisions are part of the unified partnership audit and litigation procedures enacted to simplify the review and reporting of partnership items.
In most cases, once an RAA is filed, the IRS is supposed to adjust the partners' tax returns by passing the adjustment through to their returns. Therefore, before such a filing is made, the anticipated reaction of all of the partners to a deficiency notice or tax refund should be considered.
These special rules are mandatory for all partnerships except for certain "small partnerships," which may elect to have these provisions...