1065-US: Inform partners when partnership elects out of centralized audit regime (FAQ)

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Question

How do I inform the partners when the partnership elects out of the centralized partnership audit regime?

Answer

UltraTax CS automatically includes the following required disclaimer in the Partner Letter in the Partner Package when the answer to Schedule B, Question 25 is Yes. No further action is required.

[client name] is an eligible small partnership and has elected out of the centralized partnership audit rules in accordance with Proposed Regulation 301.6221(b)-1. As a result, the IRS will be required to open deficiency proceedings, adjust items associated with this partnership, resolve issues, and assess and collect any tax that may result from the adjustments at the partner level. Each partner level deficiency proceeding is subject to its own statute of limitations and venue, which often results in separate partner-by-partner determinations with respect to the same item.

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