Partnership Audit Adjustments Under the Centralized Audit Regime

IRS audits are taking place under the Bipartisan Budget Act's new audit regime, and tax professionals are wrestling with the complexities of the new requirements. Under these rules, the partnership itself remits any underpayment resulting from an IRS examination at the end of an IRS review. It pays the additional tax due at the highest income tax rate (37 percent currently).

Alternatives include making a push-out election taxing the individual partners' interests during the year examined and showing that partners have amended their returns to account for the adjustments. The Corrections Act in 2018 reduced the burden of filing amended returns by allowing partners to pay the amount of tax due and adjust any related tax attributes without the limitation of filing amended tax returns, the pull-in procedure.

The reporting regime includes Form 8986, Partner's Share of Adjustments to Partnership-Related Items, and Form 8978, Partner's Additional Reporting Year Tax. Partners receiving Form 8986 must file Form 8978 to report additional tax due as a result of examination adjustments. Multiple forms may be obtained, covering changes for different years, and these adjustments could be both negative and positive.

The rules are so complex that the AICPA recommended a new form AAR-EZ to simplify the reporting process.

Listen as our panel of experts explains the ins and outs of audits under BBA, including making push-out and pull-in adjustments, electing out, and best practices for handling the audit.

I. The centralized audit regime

II. Electing out

III. Partnership representatives

IV. Handling the audit

V. Reporting

A. Form 8978, Partner's Additional Reporting Year Tax

B. Form 8986, Partner's Share of Adjustments to Partnership-Related Items

C. Form 8979, Partnership Representative Revocation, Designation, and Resignation

D. Form 8985, Pass-Through Statement--Transmittal/Partnership Adjustment Tracking Report

VI. Partnership agreements

The panel will review these and other vital issues:

• Push-out adjustments
• Pull-in adjustments
• IRS forms for reporting audit adjustments
• Reviewing existing and considerations for new partnership agreements
• Recommendations for handling the IRS examination

Learning Objectives

After completing this course, you will be able to:

• Understand the BBA partnership examination procedural rules
• Recognize how an imputed underpayment is computed
• Differentiate between partnership and partner liability
• Identify the impact of a push-out election
• Determine the role of the partnership representative
• Establish when a judicial review should be pursued

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and their respective partners and shareholders.

  
  

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).