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Surviving a partnership audit: success depends on selecting the right tax matters partner.

Auditing a partnership tax return is a complicated procedure because partnerships are not regarded as entities and, therefore, do not pay tax on the income they report. The tax is paid by the individual partners who report partnership income based on information provided by the partnership. When the accuracy of the partnership return is in question, it is impractical for the IRS to audit the return of each partner and assess a deficiency or refund. To solve this problem, the partnership itself is audited and deficiencies and refunds are applied to the partners' tax returns. The partnership designates a tax matters partner (TMP) to serve as the partnership's representative during the audit procedure. While only one partner can be designated as the TMP, other partners are entitled to receive notice of the start of the partnership audit as well as the final results. The skill of the TMP in performing his duties can have a great impact on the outcome of the examination. In order to select the "right" partner for the job, the partnership needs to be aware of the rules for the designation of the TMP.

This article will examine the TMP's influence on the outcome of a partnership audit, from his initial selection through the audit, its settlement and, if necessary, judicial review.

Selecting a Tax Matters Partner

The designated TMP must be a person who is a general partner in the partnership at some time during the tax year for which the designation is made. (1) Unless the IRS consents, the TMP must also be a resident or citizen of the United States. (2) If the partnership does not have a general partner who is capable of serving as the TMP, a person other than a general partner may be substituted in four circumstances recognized by the IRS.

1. The partnership's general partner is dead or bankrupt or, if the general partner is an entity, has been liquidated or dissolved. (3)

2. A court has declared the general partner incapable of managing his person or estate.

3. The general partner's partnership items (4) have been treated as nonpartnership items under Sec. 6231(b).

4. The general partner is no longer a member of the partnership. (5)

Note: The TMP must be a partner in the partnership. In the absence of a general partner, the partnership cannot designate its accountant as the TMP if the accountant owns no capital or profits interest in the partnership. (6)

The TMP's selection is usually made on space provided on From 1065, U.S. Partnership Return of Income. If the form does not contain space for making the designation, a signed statement may be attached to the partnership return containing the name, address and taxpayer identification number (TIN) of the designated partner. (7) If the partnership is audited and there is no designated TMP, the general partner holding the largest profits interest is designated as the TMP. If two or more partners have identical interests, the first partner listed in alphabetical order is selected. (8)

If none of the partners qualify as a general partner, then the Service is allowed to select the TMP at its discretion. (9)

Note: A partnership's termination under state law has no bearing on the outcome of partnership level proceedings pertaining to tax years in which the partnership was in existence. Since the proper operation of the proceedings depends on the existence of a TMP, the Service has the authority to appoint a TMP for a dissolved or terminated partnership before the filing of a Tax Court petition. The Tax Court has the authority to select the TMP after the petition has been filed. (10)

If the partnership tax return has already been filed, there are three other ways to select the TMP. First, the current TMP may certify another partner to act as the TMP for the year. The written certification is sent to the service center with which the partnership tax return was filed. The certification of the successor TMP must contain the following information.

* The name, address and TIN of the partnership, the partner filing the statement and the successor TMP.

* The partnership tax year to which the designation relates.

* A declaration that the partnership filing the statement has been properly designated as the TMP and that the designation was in effect immediately before the filing of the statement.

* A certification that the successor designated TMP has been selected according to the partnership's procedure for making such selection.

* The signature of the partner filing the statement. (11)

Second, the general partners owning a majority interest in the partnership may designate the TMP by sending a signed statement to the service center with which the partnership return was filed. (12)

Finally, partners owning a majority interest in the partnership (both general partners and limited partners) may designate the TMP. Selection by a majority of all partners is allowed only fi there are no general partners capable of making the selection. (13)

Planning strategy: Unless the partnership wants the Service to be in a position to select the TMP, the partnership should make its own selection as soon as possible, via certified mail. Even if the partnership does not follow the specific procedures for designating a TMP, the partnership's designation of a TMP will be respected so long as the designation is communicated to the Service in a timely manner. (14) The partnership may also designate an alternate TMP who would be effective if the current TMP leaves the partnership, dies or becomes legally incapacitated. (15) Since Form 1065 does not contain space for an alternate selection, a statement must be attached to the return containing the following information.

* The name, address and TIN of the partnership and the alternate TMP.

* A declaration that the statement is a designation of an alternate TMP to serve in the event of the death or legal incapacity of the TMP for the year to which the partnership return relates.

* The signature of the partner signing the partnership return.

Planning strategy: The timely designation of the TMP (including an alternate) is important because if the Service mails a notice of an audit or other administrative procedure before a TMP has been selected, it is not required to honor such designation until 30 days after the statement is filed.

A TMP may resign at any time by filing a written statement to that effect. The statement, which must be signed by the resigning TMP, should specify the partnership tax year to which the resignation relates and must identify the partnership and the resigning partner by name, address and TIN. The statement should be filed with the service center with which the partnership tax return is filed. (16)

The partnership may revoke the designation of the TMP at any time after filing the partnership tax return. A written statement filed with the service center with which the partnership tax return is filed should contain all the information necessary to identify the TMP whose designation is being revoked and the year to which the revocation relates. The revocation must also be signed by the general partners who, at the close of the tax year, owned more than 50% of the aggregate interest in partnership profits held by all general partners as of the close of the year. (17)

Notice Requirements

While only one partner can be designated as the TMP, this does not mean that the other partners will have no knowledge of an IRS audit. Each partner is entitled to receive notice of the beginning of a partnership audit as well as the results of that audit.

There are a few exceptions to this notice requirement. First, the Service is not required to notify a partner if it does not have sufficient information to determine which partners are entitled to receive notice. (18) The Service obtains this information from the TMP and by examining the partnership tax returns. Therefore, it is important for the partnership to have properly prepared Schedule K-ls for each partner. If the information on the K-ls is not up to date, the TMP must provide the Service with the correct information.

A second exception concerns those partners in a partnership with more than 100 partners who own less than a 1% interest in the partnership. Partners falling into this category may join together to form a "notice group" so long as the members of a notice group have a profits interest of 5% or more. (19) Once a notice group has been formed, the group should select one of its members to notify the Service of its formation and to receive information on behalf of the group. The notice takes effect 30 days after receipt by the Service. Profits interests are tested at the end of the year to determine whether or not a notice group meets the 5% profits interest requirement. However, if a partner disposes of his entire partnership interest during the year, his interest immediately preceding the disposition is used in applying notice requirements.

A "passthrough" partner (a partner other than an individual) that receives notice from the Service, a TMP or another passthrough partner is required to send notice to the "indirect" partners (individuals with profits interests in the passthrough partners). Notice should be in the form of a copy of the notice of the partnership proceeding, sent within 30 days of receipt of the

original notice. (20) If the Service has been informed of the identity of the indirect partners, notice of a partnership proceeding must be mailed directly to the indirect partners. A passthrough partner that is not provided notice as the law provides cannot be expected to give notice to the indirect partners. Failure to provide the passthrough partner with notice also constitutes a failure to provide the indirect partners with notice.

The TMP is required to give notice to all partners who are not otherwise entitled to receive notice of a partnership proceeding. The TMP should mail a copy of the notice of a partnership level proceeding within 75 days after the mailing by the IRS of a notice of a partnership level proceeding. A copy of the final partnership administrative adjustment (FPAA) notice must be forwarded within 60 days. (21)

Warning: When the passthrough partners are partnerships, any petition for readjustment must be made in the correct proceeding.

Example, 1: S was a limited partner in two partnerships, D and E. The Service issued FPAAs for D and E disallowing their losses and credits, most of which passed through to S. A petition for readjustment was not pursued. The Service also sent an FPAA to S disallowing all of its losses and credits, including the losses and credits from D and E. This time S pursued its petition for readjustment. The Service claimed that the Tax Court had no jurisdiction over the items from D and E and argued that those items should have been determined in separate proceedings dealing with D and E. The Tax Court agreed. (22)

When a partner does not receive proper notice, it must be determined whether a revenue agent or some other person was at fault. Also, if notice is given late, the status of the audit at the time the notice is given must be considered. If the Service is the guilty party and the proceeding is over, the partner has the following options.

1. He may elect to have the results of the audit proceeding apply to him as if he had received proper notice; or

2. He may elect to have his partnership items treated as nonpartnership items. (23)

Caution: The partner should recognize that if the partnership audit results in a victory for the Service, the partner's entire tax return is likely to be reviewed if he refuses to apply the outcome of the partnership audit to his return.

If the Service has failed to give notice and the proceeding is not over, the partner has the following options.

1. He may join the proceedings;

2. He may elect to be bound by the results of the proceedings; or

3. He may elect to have his partnership items treated as nonpartnership items. (24)

In any event, if the Service is responsbile for the failure to give notice, the partner who was not given proper notice must choose his option within 45 days.

Note: These options are the exclusive remedies available. If the Service does not give timely notice and the proceeding is not over, the FPAA is not invalidated.

Example 2: W received notice of the beginning of partnership level proceedings just seven days before the Service issued an FPAA. This was in violation of Sec. 6223(d)(1), which requires that such notice be sent at least 120 days before the FPAA. The partners moved to have the FPAA invalidated due to lack of proper notice. The Tax Court stated that invalidation of the FPAA is not listed as one of the remedies available to a partnership that does not receive timely notice. (25)

Warning: When the Service sends notice, it is required to notify the TMP as designated on the return for the year being audited, not the TMP as designated on the last partnership return filed.

Example 3: In 1988 the Service sent an FPAA to R, Inc., which was listed as the TMP for 1984, the year being audited. R was no longer the general partner, having transferred the interest to L. By the time L received notice of the FPAA, the 150-day period had expired. The partners argued that the FPAA was invalid because proper notice was not given. The Tax Court ruled that the notice given by the Service was proper. (26)

Note: When the Service sends notice, it is required to send notification only to the address listed on the return for the year being audited, not the address listed on the last partnership return filed. (27)

Planning opportunity: If the TMP or the passthrough partner failed to give notice, the partner left out of the proceedings does not have many alternatives. He will still be bound by the results of the partnership proceeding. If a partner is not required to receive notice directly from the Service but does not want to depend on receiving notice from the TMP or a passthrough partner, he can form a notice group. By doing this, he becomes entitled to direct notice and if the Service fails to provided that notice, he has some options.

The TMP's Other Duties

Besides giving notice, the TMP has other duties crucial to the audit process that start before the audit begins. The TMP must reply to the audit notice by contacting the designated representative from the Service to schedule the time and place of the initial meeting. During the audit, the following information should be disclosed to all partners.

* An appointment with the IRS examining agent for the purpose of the closing conference.

* Proposed adjustments to the partnership items.

* Rights to appeal findings.

* Requirements for filing protests.

* The time and location of the appeals conference.

* An acceptance of a settlement offer.

* Agreements to extend the limitations period for assessing taxes against partners.

* The filing of an administrative adjustment request (AAR) on behalf of the partnership.

* The filing of a petition for judicial review of the FPAA.

* The filing of an appeal of a judicial decision.

* The final court decision. (28)

Planning opportunity: The position of the TMP is not just a procedural one, for the TMP has real influence on the potential outcome of the audit. The TMP has the sole authority to institute a judicial action against the findings in the FPAA during the 90-day period beginning on the date of the FPAA notice. The TMP also decides to which court the partnership will appeal and may extend the period of assessment of tax. These decisions are binding on the partnership and on all partners. If the TMP reaches an agreement with respect to adjustments of partnership items, the adjustments are binding on all partners who are not entitled to separate notice from the Service. If a nonnotice partner does not like this, he must notify the Service at least 30 days before any agreement that the TMP does not have the authority to act on his behalf.

Planning opportunity: What if the partnership erred in its selection of a TMP and chose one who was not diligent in the performance of his duties, especially his duty to give notice? In the absence of fraud, malfeasance or misrepresentation of fact, any settlement agreement made by the TMP is binding on all partners who are not otherwise entitled to receive notice. It is also assumed that decisions of the TMP concerning other matters, such as the extension of the statute of limitations, will also be binding. (29) The importance of choosing the right TMP cannot be overemphasized.

Example 4: C, an individual, is a 0.495% partner in E, a limited partnership. The Service sent an FPAA to the TMP, who did not file a petition for readjustment within the 90-day limit. C filed his own petition and was denied jurisdiction because he was not a notice partner or part of a notice group. As a result, he was bound by the decision of the TMP. (30)

Examination and Settlement

While it is important to select the correct TMP, perhaps the most important aspect of a partnership audit is the right of each partner to participate in any administrative proceeding relating to the tax determination of partnership items at the partnership level. While the TMP is the authorized representative of the partnership, the individual partner cannot be excluded from the determination of the proper tax treatment of partnership items since these items will affect his return. In the majority of cases, a partner's interests are best served by selecting a competent TMP and hiring a tax professional to assist in the examination, rather than being personally involved in the audit. Despite this warning on self-involvement, a partner's guaranteed right of participation should not be overlooked.

Planning opportunity: As noted earlier, only those partners who are notice partners entitled to notification by the Service are assured of notification. Therefore, it is doubly important to take whatever steps are necessary to become a notice partner. If the taxpayer becomes a notice partner and is certain that he or his authorized representative needs to be involved in any future partnership proceedings, a written (preferably certified) letter informing the TMP of his desire to participate in future proceedings should be mailed to the TMP as soon as possible.

The conduct of the examination by the IRS is similar to that for any other entity, such as an individual or corporation; however, there are some important differences. When the examining agent has completed his examination, he should deliver a report to the TMP summarizing the proposed adjustments and identifying areas of known disagreement. The TMP should forward a copy of this report to all notice partners. A closing conference is then held. Notice partners are notified of the results of the closing conference in a "60-day letter" issued by the Service. The "60-day letter" allows each notice partner to decide his next course of action. This letter will contain a Form 870-P, Agreement to Assessment and Collection of Deficiency in Tax for Partnership Adjustments. The partner may agree with the Service by signing the Form 870-P or request a hearing before the IRS Appeals Division. If the partner fails to respond within the allowed 60-day period, the Service will issue the FPAA notice.

Generally, if the Service settles with any partner, it must offer a settlement under the same terms to any other partner requesting such settlement. Any settlement with a partner must be "self-contained" with respect to partnership items. This means that a settlement agreement may not be based on the partner giving up nonpartnership items to gain a resolution of the treatment of partnership items.

Example 5: M, an individual, is a 20% partner in partnership K. K's 1990 return is audited and M is seeking a settlement. M cannot agree to revalue land he had contributed to his church in return for favorable treatment on partnership losses.

Planning opportunity: Any partner wanting a consistent settlement agreement must notify the IRS office that entered into the settlement. (31)

The TMP must inform partners of settlement offers accepted by the Service. The settlement agreement cannot be further broken down by a partner; it must be accepted "as is" or refused. Once a settlement is executed, all of the partnership items covered are treated as nonpartnership items. The items cannot then be examined unless fraud, malfeasance or misrepresentation of fact is proven. As mentioned earlier, the TMP has the authority to bind nonnotice partners. He does not have the authority to bind the notice partners.

There is a period of 150 days beginning on the date of the FPAA during which the Service cannot make assessments. (32) This is similar to the 90-day period allowed after the date of the "90-day letter" common in the examination of individual tax returns. A petition to the Tax Court must be filed within this 150-day period to prevent assessment until the Tax Court has rendered its decision. Under Sec. 6226, during the first 90 days of this period, only the TMP may file a petition for judicial consideration.

Review of a Partnership Audit

Receipt of the FPAA signals the end of the partnership audit as far as administrative dealings with the Service are concerned--the audit, closing conference with the examining agent and a hearing with the IRS Appellate Division have all been completed. The FPAA also signals the time the a decision must be made to accept, at least for the present, the negotiated settlement with the Service and pay the additional tax or seek "justice" through a judicial review by the Tax Court.

Planning strategy: Filing a petition for review by the Tax Court is the only way to continue to fight the proposed adjustments without first paying the tax associated with the adjustment.

The FPAA gives the taxpayer a period of 150 days to arrive at a decision. (33) After the 150-day period has expired, petition to the Tax Court is prohibited. The petition must be filed within the 150-day period even if the FPAA is barred by the statute of limitations. In Genesis Oil & Gas, (34) the Tax Court stated that it can determine whether the Service's FPAA is barred by the statute of limitations only after it has jurisdiction of the case. If the TMP or the notice partners do not file a timely petition, the Tax Court is unable to rule on the matter.

The taxpayer may sue in the district court or the Claims Court; however, payment of the tax is a prerequisite to bringing a cause of action in either court.

Planning point: The taxpayer is allowed a jury trial if he brings suitin the district court.

Selection of the proper court, weighing the probable cost against the probable benefit, and assessing the probability that the courts might consider the tax treatment of other partnership items not previously addressed in the audit examination are all important factors to consider before deciding how to proceed.

The TMP, any notice partner or a notice group may file a petition requesting a judicial review. During the first 90 days of the 150-day period, only the TMP can bring suit because no more than one judicial proceeding may be used to seek a judicial review of the FPAA. If the TMP decides to bring suit, the court selected is binding on all partners. If the TMP does not bring suit within 90 days, the first suit that is filed in the Tax Court will review the FPAA. The Tax Court has jurisdiction even if an earlier petition has been filed in the district court or the Claims Court.

As noted earlier, if a partner brings suit in the district court or the Claims Court, he must pay (or deposit) an amount equal to the increase in tax associated with the findings set out in the FPAA. If a later petition is filed in the Tax Court within the 150-day grace period, amounts deposited with the district court or the Claims Court will be refunded. (35)

Warning: If the TMP does not file a petition for readjustment within the 90-day period (or if there is no TMP), the burden is on the notice partners to file a petition within the following 60-day period.

Example 6: D is the sole general partner of S, a limited partnership. As the result of a bankruptcy proceeding, D could no longer serve as the TMP. In 1987, the Service sent an FPAA to the "tax matters partner" and to S's notice partners. Since there was no TMP, no petition was filed within the 90-day limit. The notice partners filed their petition for readjustment after the expiration of the 60-day limit and the Tax Court dismissed for lack of jurisdiction. The notice partners stated that the FPAA was null and void because the Service failed to appoint a TMP as required. The court stated that while the Service is authorized to designate a TMP, it is not compelled to do so if the rights of the parties have not been prejudiced. Since the notice partners received copies of the FPAA, their rights were not prejudiced by the absence of a TMP. (36)

Once a suit has been filed, all who were partners at any time during the partnership's tax year in question are made a party to the suit. The TMP is entitled to intervene in any litigation begun by another partners. The power of the TMP to choose the court to review the FPAA and to intervene in any suit brought by another partner should not be taken lightly.

Administrative Adjustment Request

Form 8082, Notice of Inconsistent Treatment or Amended Return (Administrative Adjustment Request (AAR)), is the form that may be used by any partner to initiate an investigation of the tax liability associated with any partnership item. It can be used by the TMP to file an amended return or claim a refund (or credit) on behalf of the entire partnership or by any partner (including the TMP) to claim a tax credit or refund in regard to his individual tax return. The request must be filed within three years of the latter of the date on which the partnership return for such year is filed or the last day for filing the partnership return for such year, disregarding extensions. If the Service has begun an audit of the partnership year, the request must be filed before the Service mails the FPAA to the TMP. (37) Filing the AAR does not automatically cause the Service to conduct a unified partnership level examination. Many options are available.

The Service may classify a request for adjustment by the TMP as an amended return or a claim for refund (or credit). If the TMP wants the request to be classified as an amended return, he must make such request. Each partner should be given an amended Schedule K-1 by the TMP. If the Service refuses to classify the AAR as an amended return, it does not mean that it has rejected changes. Rather, it means that the Service will treat the AAR as a refund claim filed on behalf of the partnership.

If the Service accepts the AAR as an amended return, the adjustments reflected on the AAR are treated as corrections of mathematical or clerical errors appearing on a previous return. (38) The amended return does not replace the original return or assume the legal status of the original return.

Warning: The statute of limitations does not restart on the filing of an AAR.

If the AAR is accepted as an amended return, the Service may immediately assess any partner for the tax increase associated with the AAR.

Planning strategory: To prevent this immediate assessment, a partner has 60 days to notify the Service that he will not be bound by the changes made in the AAR. If this notice is filed, the Service must conduct a partnership level audit.

If the AAR is not classified as an amended return, the Service has three alternatives.

1. It may grant all or part of the requested adjustments;

2. It may conduct a partnership level proceeding to examine the changes requested; or

3. It may refuse to take action. (39)

An AAR filed by an individual partner adjusts partnership items reported on that partner's return. Therefore, a Form 1040X, Amended U.S. Individual Income Tax Return, or a Form 1120X, Amended U.S. Corporation Income Tax Return (if the partner is a corporation) must be submitted with the AAR.

Warning: A partner's submission of an AAR does not guarantee a partnership level audit. Actually, it is more likely that the partner's individual return will be audited. Since an amended return was submitted with the AAR, the Service may find other items not related to the partnership to investigate.

Reminder: The AAR filed by the TMP addresses partnership items as contained in the partnership return. The AAR filed by an individual can address only those partnership items present on the individual return.

The Service has four options under Sec. 6227(c) in dealing with an AAR filed by a partner.

1. It may grant all or part of the requested adjustment;

2. It may elect to treat the partnership items as nonpartnership items and conduct an audit of the partner's tax return;

3. It may institute a partnership level audit; or

4. It may refuse to take any action.

Judicial Review of an AAR

A judicial review of an AAR is available only after the Service has disallowed all or part of the requested adjustments. The Service may disallow the requested adjustments by expressly disallowing them or by failing to respond to the request. A court is limited in its review of an AAR to addressing those adjustments disallowed by the Service. (40) This is a major difference between a review of an AAR and a review of an FPAA.

Planning strategy: In their review of an FPAA, the courts are allowed to consider the tax treatment of any partnership item and are not limited to those addressed in the FPAA.

A request for a judicial review of an AAR filed by the TMP on behalf of the partnership will be binding on all partners in the partnership.

Planning strategy: If the AAR was filed by a partner, the judicial review can affect only that partner's tax liability. Therefore, all contested items are treated as nonpartnership items. The Service is not compelled to change the treatment of the item on the partnership return or to allow the change to any other partner. Only the partner filing the AAR is affected.

A request for judicial review must be filed during the period beginning six months after the filing of the AAR and ending two years after that date. (41) The judicial review may be to the Tax Court, the district court or the Claims Court. Judicial review may not be requested proceeding involving the the TMP of a partnership proceeding involving the tax year covered by the AAR. (42) Accordingly, if the TMP files an AAR that he wants to have treated as an amended return and asks that the AAR be judicially reviewed, the review will not be granted if the year in question becomes the subject of a partnership level audit.


The ruled regarding the audit of a partnership are complex. Much of the authority for the direction the audit takes lies with the tax matters partner. Therefore, the best way to insure a successful outcome is to select a competent TMP.

(1) Sec. 6231(a)(7); Temp. Regs. Sec. 301.6231(a)(7)-1T(b)(1).

(2) Temp. Regs. Sec. 301.6231(a)(7)-1T(b)(2).

(3) Barbados #7, Ltd., 92 TC 804 (1989).

(4) Partnership items are defined as those items appropriately determined at the partnership level rather than at the partner level. Partnership items can be challenged by the Service only by conducting an audit of the partnership. Nonpartnership items can ducting an audit of the partnership. Nonpartnership items can be challenged on the partner's return without an audit of the partnership. See Regs. Sec. 301.6231(a)(3)-1 for a checklist of partnership items.

(5) Temp. Regs. Sec. 301.6231(a)(7)-1T(f).

(6) Montana Sapphire Associates, Ltd., 95 TC 477 (1990).

(7) Temp. Res. Sec. 301.6231(a)(7)-1T(c).

(8) Temp. Regs. Sec. 301.6231(a)(7)-1T(m)(2). See also Amesbury Apartments, Ltd., 95 TC 227 (1990).

(9) Computer Programs Lambda, Ltd., 90 TC 1125 (1988).

(10) Chef's Choice Produce, Ltd., 95 TC 388 (1990).

(11) Temp. Regs. Sec. 301.6231(a)(7)-1T(d).

(12) Temp. Regs. Sec. 301.6231(a)(7)-1T(e).

(13) Temp. Regs. Sec. 301.6231(a)(7)-1T(f).

(14) Chomp Associates, 91 TC 1069 (1988).

(15) Temp. Regs. Sec. 301.6231(a)(7)-1T(g).

(16) Temp. Regs. Sec. 301.6231(a)(7)-1T(i).

(17) Temp. Regs. Sec. 301.6223(a)(7)-1T(j).

(18) Sec. 6223(a).

(19) Sec. 6223(b); Temp. Regs. Sec. 301.6223(b)-1T(a).

(20) Temp. Regs. Sec. 301.6223(h)-1T.

(21) Temp. Regs. Sec. 301.6223(g)-1T(a).

(22) This example is based on Sente Investment Club Partnership of Utah, 95 TC 243 (1990).

(23) Temp. Regs. Sec. 301.6223(e)-2T(a).

(24) Temp. Regs. Sec. 301.6223(e)-2T(b).

(25) This example is based on Wind Energy Technology Associates III, 94 TC 787 (1990).

(26) This example is based on Utah Bioresearch 1984, Ltd., TC Memo 1989-612.

(27) Triangle Investors Limited Partnership, 95 TC 610 (1990).

(28) Temp. Regs. Sec. 301.6223(g)-1T(b).

(29) Temp. Regs. Sec. 301.6224(c)-1T.

(30) This example is based on Energy Resources, Ltd., 91 TC 913 (1988).

(31) Temp. Regs. Sec. 301.6224(c)-3T(c).

(32) Sec. 6225(a).

(33) Sec. 6226(b).

(34) Genesis Oil & Gas, Ltd., 93 TC 562 (1989). See also Cambridge Research and Development Group, TC Memo 1989-679.

(36) This example is based on Seneca, Ltd., 92 TC 363 (1989).

(37) Sec. 6227(a).

(38) Sec. 6227(b)(1).

(39) Sec. 6227(b)(2)(A).

(40) Sec. 6228(a)(1).

(41) Sec. 6228(a)(2).

(42) Sec. 6228(a)(2)(B).
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Author:Wise, Spence L.
Publication:The Tax Adviser
Date:Mar 1, 1992
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