Alert

Partnership Audit Adjustments Under the Centralized Audit Regime

Push-Out and Pull-In Adjustments, Audit Tips, and New Forms 8978 and 8986

Note: CLE credit is not offered on this program

A live 110-minute CPE webinar with interactive Q&A


Wednesday, April 22, 2020

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

or call 1-800-926-7926

This webinar will cover practical considerations for partners and advisers to partnerships now operating under the new partnership audit regime. Our panel of experts will review the latest guidance, explain partnership audit adjustments, and make recommendations for steps to take in light of the implementation of this new regime.

Description

The centralized partnership audit regime (CAR) is effective now. The Bipartisan Budget Act of 2015 (BBA) included a new audit regime for partnerships effective for audits of partnership returns for years beginning in 2018.

Under the new rules, the partnership itself remits the underpayment (or receives the overpayment) resulting from an IRS examination at the end of an IRS review and pays the additional tax due at the highest income tax rate available (37% currently). Alternatives include making a push-out election taxing the individual partners owning interests during the year examined and showing that partners have amended their returns to account for the adjustments, the amended return adjustment. 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 burden of filing amended tax returns, the pull-in procedure.

New forms have been issued to handle the new reporting regime--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 received, covering changes for different years, and these adjustments could be both negative and positive.

Advisers should revisit all partnership agreements and revise as needed to incorporate these audit procedures. Partnerships should consider requiring partners to amend returns in years reviewed or to participate in the pull-in procedure if audited. Additionally, requirements should be added to agreements to ensure the partnership representative acts in the best interest of the partnership.

Listen as our panel of experts explains the ins and outs of audits under CAR, including push-out and pull-in adjustments, newly issued forms, and best practices for handling the audit itself.

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Outline

  1. The centralized audit regime
  2. Electing out
  3. Partnership representatives
  4. Handling the audit
  5. New forms
    1. Form 8978, Partner's Additional Reporting Year Tax
    2. Form 8986, Partner's Share of Adjustments to Partnership-Related Items
    3. Form 8979, Partnership Representative Revocation, Designation, and Resignation
    4. Form 8985, Pass-Through Statement--Transmittal/Partnership Adjustment Tracking Report
  6. Partnership agreements

Benefits

The panel will review these and other important issues:

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

Faculty

Horwitz, Robert
Robert Horwitz

Attorney
Hochman Salkin Toscher Perez

Mr. Horwitz has over 35 years of experience as a tax attorney specializing in the representation of clients in civil...  |  Read More

Kalinski, Jonathan
Jonathan Kalinski

Principal
Hochman Salkin Toscher Perez

Mr. Kalinski specializes in both civil and criminal tax controversies as well as sensitive tax matters including...  |  Read More

Stein, Michel
Michel R. Stein

Principal
Hochman Salkin Toscher Perez

Mr. Stein specializes in tax controversies, as well as tax planning for individuals, businesses and corporations. For...  |  Read More

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