Subchapter C - Tax Treatment of Partnership Items

26 USC 6221 - Tax treatment determined at partnership level

Except as otherwise provided in this subchapter, the tax treatment of any partnership item (and the applicability of any penalty, addition to tax, or additional amount which relates to an adjustment to a partnership item) shall be determined at the partnership level.

26 USC 6222 - Partners return must be consistent with partnership return or Secretary notified of inconsistency

(a) In general 
A partner shall, on the partners return, treat a partnership item in a manner which is consistent with the treatment of such partnership item on the partnership return.
(b) Notification of inconsistent treatment 

(1) In general 
In the case of any partnership item, if
(A) 
(i) the partnership has filed a return but the partners treatment on his return is (or may be) inconsistent with the treatment of the item on the partnership return, or
(ii) the partnership has not filed a return, and
(B) the partner files with the Secretary a statement identifying the inconsistency,

subsection (a) shall not apply to such item.

(2) Partner receiving incorrect information 
A partner shall be treated as having complied with subparagraph (B) of paragraph (1) with respect to a partnership item if the partner
(A) demonstrates to the satisfaction of the Secretary that the treatment of the partnership item on the partners return is consistent with the treatment of the item on the schedule furnished to the partner by the partnership, and
(B) elects to have this paragraph apply with respect to that item.
(c) Effect of failure to notify 
In any case
(1) described in paragraph (1)(A)(i) of subsection (b), and
(2) in which the partner does not comply with paragraph (1)(B) of subsection (b),

section 6225 shall not apply to any part of a deficiency attributable to any computational adjustment required to make the treatment of the items by such partner consistent with the treatment of the items on the partnership return.

(d) Addition to tax for failure to comply with section 
For addition to tax in the case of a partners disregard of requirements of this section, see part II of subchapter A of chapter 68.

26 USC 6223 - Notice to partners of proceedings

(a) Secretary must give partners notice of beginning and completion of administrative proceedings 
The Secretary shall mail to each partner whose name and address is furnished to the Secretary notice of
(1) the beginning of an administrative proceeding at the partnership level with respect to a partnership item, and
(2) the final partnership administrative adjustment resulting from any such proceeding.

A partner shall not be entitled to any notice under this subsection unless the Secretary has received (at least 30 days before it is mailed to the tax matters partner) sufficient information to enable the Secretary to determine that such partner is entitled to such notice and to provide such notice to such partner.

(b) Special rules for partnership with more than 100 partners 

(1) Partner with less than 1 percent interest 
Except as provided in paragraph (2), subsection (a) shall not apply to a partner if
(A) the partnership has more than 100 partners, and
(B) the partner has a less than 1 percent interest in the profits of the partnership.
(2) Secretary must give notice to notice group 
If a group of partners in the aggregate having a 5 percent or more interest in the profits of a partnership so request and designate one of their members to receive the notice, the member so designated shall be treated as a partner to whom subsection (a) applies.
(c) Information base for Secretary’s notices, etc. 
For purposes of this subchapter
(1) Information on partnership return 
Except as provided in paragraphs (2) and (3), the Secretary shall use the names, addresses, and profits interests shown on the partnership return.
(2) Use of additional information 
The Secretary shall use additional information furnished to him by the tax matters partner or any other person in accordance with regulations prescribed by the Secretary.
(3) Special rule with respect to indirect partners 
If any information furnished to the Secretary under paragraph (1) or (2)
(A) shows that a person has a profits interest in the partnership by reason of ownership of an interest through 1 or more pass-thru partners, and
(B) contains the name, address, and profits interest of such person,

then the Secretary shall use the name, address, and profits interest of such person with respect to such partnership interest (in lieu of the names, addresses, and profits interests of the pass-thru partners).

(d) Period for mailing notice 

(1) Notice of beginning of proceedings 
The Secretary shall mail the notice specified in paragraph (1) of subsection (a) to each partner entitled to such notice not later than the 120th day before the day on which the notice specified in paragraph (2) of subsection (a) is mailed to the tax matters partner.
(2) Notice of final partnership administrative adjustment 
The Secretary shall mail the notice specified in paragraph (2) of subsection (a) to each partner entitled to such notice not later than the 60th day after the day on which the notice specified in such paragraph (2) was mailed to the tax matters partner.
(e) Effect of Secretary’s failure to provide notice 

(1) Application of subsection 

(A) In general 
This subsection applies where the Secretary has failed to mail any notice specified in subsection (a) to a partner entitled to such notice within the period specified in subsection (d).
(B) Special rules for partnerships with more than 100 partners 
For purposes of subparagraph (A), any partner described in paragraph (1) of subsection (b) shall be treated as entitled to notice specified in subsection (a). The Secretary may provide such notice
(i) except as provided in clause (ii), by mailing notice to the tax matters partner, or
(ii) in the case of a member of a notice group which qualified under paragraph (2) of subsection (b), by mailing notice to the partner designated for such purpose by the group.
(2) Proceedings finished 
In any case to which this subsection applies, if at the time the Secretary mails the partner notice of the proceeding
(A) the period within which a petition for review of a final partnership administrative adjustment under section 6226 may be filed has expired and no such petition has been filed, or
(B) the decision of a court in an action begun by such a petition has become final,

the partner may elect to have such adjustment, such decision, or a settlement agreement described in paragraph (2) of section 6224 (c) with respect to the partnership taxable year to which the adjustment relates apply to such partner. If the partner does not make an election under the preceding sentence, the partnership items of the partner for the partnership taxable year to which the proceeding relates shall be treated as nonpartnership items.

(3) Proceedings still going on 
In any case to which this subsection applies, if paragraph (2) does not apply, the partner shall be a party to the proceeding unless such partner elects
(A) to have a settlement agreement described in paragraph (2) of section 6224 (c) with respect to the partnership taxable year to which the proceeding relates apply to the partner, or
(B) to have the partnership items of the partner for the partnership taxable year to which the proceeding relates treated as nonpartnership items.
(f) Only one notice of final partnership administrative adjustment 
If the Secretary mails a notice of final partnership administrative adjustment for a partnership taxable year with respect to a partner, the Secretary may not mail another such notice to such partner with respect to the same taxable year of the same partnership in the absence of a showing of fraud, malfeasance, or misrepresentation of a material fact.
(g) Tax matters partner must keep partners informed of proceedings 
To the extent and in the manner provided by regulations, the tax matters partner of a partnership shall keep each partner informed of all administrative and judicial proceedings for the adjustment at the partnership level of partnership items.
(h) Pass-thru partner required to forward notice 

(1) In general 
If a pass-thru partner receives a notice with respect to a partnership proceeding from the Secretary, the tax matters partner, or another pass-thru partner, the pass-thru partner shall, within 30 days of receiving that notice, forward a copy of that notice to the person or persons holding an interest (through the pass-thru partner) in the profits or losses of the partnership for the partnership taxable year to which the notice relates.
(2) Partnership as pass-thru partner 
In the case of a pass-thru partner which is a partnership, the tax matters partner of such partnership shall be responsible for forwarding copies of the notice to the partners of such partnership.

26 USC 6224 - Participation in administrative proceedings; waivers; agreements

(a) Participation in administrative proceedings 
Any partner has the right to participate in any administrative proceeding relating to the determination of partnership items at the partnership level.
(b) Partner may waive rights 

(1) In general 
A partner may at any time waive
(A) any right such partner has under this subchapter, and
(B) any restriction under this subchapter on action by the Secretary.
(2) Form 
Any waiver under paragraph (1) shall be made by a signed notice in writing filed with the Secretary.
(c) Settlement agreement 
In the absence of a showing of fraud, malfeasance, or misrepresentation of fact
(1) Binds all parties 
A settlement agreement between the Secretary or the Attorney General (or his delegate) and 1 or more partners in a partnership with respect to the determination of partnership items for any partnership taxable year shall (except as otherwise provided in such agreement) be binding on all parties to such agreement with respect to the determination of partnership items for such partnership taxable year. An indirect partner is bound by any such agreement entered into by the pass-thru partner unless the indirect partner has been identified as provided in section 6223 (c)(3).
(2) Other partners have right to enter into consistent agreements 
If the Secretary or the Attorney General (or his delegate) enters into a settlement agreement with any partner with respect to partnership items for any partnership taxable year, the Secretary or the Attorney General (or his delegate) shall offer to any other partner who so requests settlement terms for the partnership taxable year which are consistent with those contained in such settlement agreement. Except in the case of an election under paragraph (2) or (3) of section 6223 (e) to have a settlement agreement described in this paragraph apply, this paragraph shall apply with respect to a settlement agreement entered into with a partner before notice of a final partnership administrative adjustment is mailed to the tax matters partner only if such other partner makes the request before the expiration of 150 days after the day on which such notice is mailed to the tax matters partner.
(3) Tax matters partner may bind certain other partners 

(A) In general 
A partner who is not a notice partner (and not a member of a notice group described in subsection (b)(2) of section 6223) shall be bound by any settlement agreement
(i) which is entered into by the tax matters partner, and
(ii) in which the tax matters partner expressly states that such agreement shall bind the other partners.
(B) Exception 
Subparagraph (A) shall not apply to any partner who (within the time prescribed by the Secretary) files a statement with the Secretary providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such partner.

26 USC 6225 - Assessments made only after partnership level proceedings are completed

(a) Restriction on assessment and collection 
Except as otherwise provided in this subchapter, no assessment of a deficiency attributable to any partnership item may be made (and no levy or proceeding in any court for the collection of any such deficiency may be made, begun, or prosecuted) before
(1) the close of the 150th day after the day on which a notice of a final partnership administrative adjustment was mailed to the tax matters partner, and
(2) if a proceeding is begun in the Tax Court under section 6226 during such 150-day period, the decision of the court in such proceeding has become final.
(b) Premature action may be enjoined 
Notwithstanding section 7421 (a), any action which violates subsection (a) may be enjoined in the proper court, including the Tax Court. The Tax Court shall have no jurisdiction to enjoin any action or proceeding under this subsection unless a timely petition for a readjustment of the partnership items for the taxable year has been filed and then only in respect of the adjustments that are the subject of such petition.
(c) Limit where no proceeding begun 
If no proceeding under section 6226 is begun with respect to any final partnership administrative adjustment during the 150-day period described in subsection (a), the deficiency assessed against any partner with respect to the partnership items to which such adjustment relates shall not exceed the amount determined in accordance with such adjustment.

26 USC 6226 - Judicial review of final partnership administrative adjustments

(a) Petition by tax matters partner 
Within 90 days after the day on which a notice of a final partnership administrative adjustment is mailed to the tax matters partner, the tax matters partner may file a petition for a readjustment of the partnership items for such taxable year with
(1) the Tax Court,
(2) the district court of the United States for the district in which the partnerships principal place of business is located, or
(3) the Court of Federal Claims.
(b) Petition by partner other than tax matters partner 

(1) In general 
If the tax matters partner does not file a readjustment petition under subsection (a) with respect to any final partnership administrative adjustment, any notice partner (and any 5-percent group) may, within 60 days after the close of the 90-day period set forth in subsection (a), file a petition for a readjustment of the partnership items for the taxable year involved with any of the courts described in subsection (a).
(2) Priority of the Tax Court action 
If more than 1 action is brought under paragraph (1) with respect to any partnership for any partnership taxable year, the first such action brought in the Tax Court shall go forward.
(3) Priority outside the Tax Court 
If more than 1 action is brought under paragraph (1) with respect to any partnership for any taxable year but no such action is brought in the Tax Court, the first such action brought shall go forward.
(4) Dismissal of other actions 
If an action is brought under paragraph (1) in addition to the action which goes forward under paragraph (2) or (3), such action shall be dismissed.
(5) Treatment of premature petitions 
If
(A) a petition for a readjustment of partnership items for the taxable year involved is filed by a notice partner (or a 5-percent group) during the 90-day period described in subsection (a), and
(B) no action is brought under paragraph (1) during the 60-day period described therein with respect to such taxable year which is not dismissed,

such petition shall be treated for purposes of paragraph (1) as filed on the last day of such 60-day period.

(6) Tax matters partner may intervene 
The tax matters partner may intervene in any action brought under this subsection.
(c) Partners treated as parties 
If an action is brought under subsection (a) or (b) with respect to a partnership for any partnership taxable year
(1) each person who was a partner in such partnership at any time during such year shall be treated as a party to such action, and
(2) the court having jurisdiction of such action shall allow each such person to participate in the action.
(d) Partner must have interest in outcome 

(1) In order to be party to action 
Subsection (c) shall not apply to a partner after the day on which
(A) the partnership items of such partner for the partnership taxable year became nonpartnership items by reason of 1 or more of the events described in subsection (b) of section 6231, or
(B) the period within which any tax attributable to such partnership items may be assessed against that partner expired.

Notwithstanding subparagraph (B), any person treated under subsection (c) as a party to an action shall be permitted to participate in such action (or file a readjustment petition under subsection (b) or paragraph (2) of this subsection) solely for the purpose of asserting that the period of limitations for assessing any tax attributable to partnership items has expired with respect to such person, and the court having jurisdiction of such action shall have jurisdiction to consider such assertion.

(2) To file petition 
No partner may file a readjustment petition under subsection (b) unless such partner would (after the application of paragraph (1) of this subsection) be treated as a party to the proceeding.
(e) Jurisdictional requirement for bringing action in district court or Court of Federal Claims 

(1) In general 
A readjustment petition under this section may be filed in a district court of the United States or the Court of Federal Claims only if the partner filing the petition deposits with the Secretary, on or before the day the petition is filed, the amount by which the tax liability of the partner would be increased if the treatment of partnership items on the partners return were made consistent with the treatment of partnership items on the partnership return, as adjusted by the final partnership administrative adjustment. In the case of a petition filed by a 5-percent group, the requirement of the preceding sentence shall apply to each member of the group. The court may by order provide that the jurisdictional requirements of this paragraph are satisfied where there has been a good faith attempt to satisfy such requirements and any shortfall in the amount required to be deposited is timely corrected.
(2) Refund on request 
If an action brought in a district court of the United States or in the Court of Federal Claims is dismissed by reason of the priority of a Tax Court action under paragraph (2) of subsection (b), the Secretary shall, at the request of the partner who made the deposit, refund the amount deposited under paragraph (1).
(3) Interest payable 
Any amount deposited under paragraph (1), while deposited, shall not be treated as a payment of tax for purposes of this title (other than chapter 67).
(f) Scope of judicial review 
A court with which a petition is filed in accordance with this section shall have jurisdiction to determine all partnership items of the partnership for the partnership taxable year to which the notice of final partnership administrative adjustment relates, the proper allocation of such items among the partners, and the applicability of any penalty, addition to tax, or additional amount which relates to an adjustment to a partnership item.
(g) Determination of court reviewable 
Any determination by a court under this section shall have the force and effect of a decision of the Tax Court or a final judgment or decree of the district court or the Court of Federal Claims, as the case may be, and shall be reviewable as such. With respect to the partnership, only the tax matters partner, a notice partner, or a 5-percent group may seek review of a determination by a court under this section.
(h) Effect of decision dismissing action 
If an action brought under this section is dismissed (other than under paragraph (4) of subsection (b)), the decision of the court dismissing the action shall be considered as its decision that the notice of final partnership administrative adjustment is correct, and an appropriate order shall be entered in the records of the court.

26 USC 6227 - Administrative adjustment requests

(a) General rule 
A partner may file a request for an administrative adjustment of partnership items for any partnership taxable year at any time which is
(1) within 3 years after the later of
(A) the date on which the partnership return for such year is filed, or
(B) the last day for filing the partnership return for such year (determined without regard to extensions), and
(2) before the mailing to the tax matters partner of a notice of final partnership administrative adjustment with respect to such taxable year.
(b) Special rule in case of extension of period of limitations under section 6229 
The period prescribed by subsection (a)(1) for filing of a request for an administrative adjustment shall be extended
(1) for the period within which an assessment may be made pursuant to an agreement (or any extension thereof) under section 6229 (b), and
(2) for 6 months thereafter.
(c) Requests by tax matters partner on behalf of partnership 

(1) Substituted return 
If the tax matters partner
(A) files a request for an administrative adjustment, and
(B) asks that the treatment shown on the request be substituted for the treatment of partnership items on the partnership return to which the request relates,

the Secretary may treat the changes shown on such request as corrections of mathematical or clerical errors appearing on the partnership return.

(2) Requests not treated as substituted returns 

(A) In general 
If the tax matters partner files an administrative adjustment request on behalf of the partnership which is not treated as a substituted return under paragraph (1), the Secretary may, with respect to all or any part of the requested adjustments
(i) without conducting any proceeding, allow or make to all partners the credits or refunds arising from the requested adjustments,
(ii) conduct a partnership proceeding under this subchapter, or
(iii) take no action on the request.
(B) Exceptions 
Clause (i) of subparagraph (A) shall not apply with respect to a partner after the day on which the partnership items become nonpartnership items by reason of 1 or more of the events described in subsection (b) of section 6231.
(3) Request must show effect on distributive shares 
The tax matters partner shall furnish with any administrative adjustment request on behalf of the partnership revised schedules showing the effect of such request on the distributive shares of the partners and such other information as may be required under regulations.
(d) Other requests 
If any partner files a request for an administrative adjustment (other than a request described in subsection (c)), the Secretary may
(1) process the request in the same manner as a claim for credit or refund with respect to items which are not partnership items,
(2) assess any additional tax that would result from the requested adjustments,
(3) mail to the partner, under subparagraph (A) of section 6231 (b)(1) (relating to items becoming nonpartnership items), a notice that all partnership items of the partner for the partnership taxable year to which such request relates shall be treated as nonpartnership items, or
(4) conduct a partnership proceeding.
(e) Requests with respect to bad debts or worthless securities 
In the case of that portion of any request for an administrative adjustment which relates to the deductibility by the partnership under section 166 of a debt as a debt which became worthless, or under section 165(g) of a loss from worthlessness of a security, the period prescribed in subsection (a)(1) shall be 7 years from the last day for filing the partnership return for the year with respect to which such request is made (determined without regard to extensions).

26 USC 6228 - Judicial review where administrative adjustment request is not allowed in full

(a) Request on behalf of partnership 

(1) In general 
If any part of an administrative adjustment request filed by the tax matters partner under subsection (c) of section 6227 is not allowed by the Secretary, the tax matters partner may file a petition for an adjustment with respect to the partnership items to which such part of the request relates with
(A) the Tax Court,
(B) the district court of the United States for the district in which the principal place of business of the partnership is located, or
(C) the Court of Federal Claims.
(2) Period for filing petition 

(A) In general 
A petition may be filed under paragraph (1) with respect to partnership items for a partnership taxable year only
(i) after the expiration of 6 months from the date of filing of the request under section 6227, and
(ii) before the date which is 2 years after the date of such request.
(B) No petition after notice of beginning of administrative proceeding 
No petition may be filed under paragraph (1) after the day the Secretary mails to the partnership a notice of the beginning of an administrative proceeding with respect to the partnership taxable year to which such request relates.
(C) Failure by Secretary to issue timely notice of adjustment 
If the Secretary
(i) mails the notice referred to in subparagraph (B) before the expiration of the 2-year period referred to in clause (ii) of subparagraph (A), and
(ii) fails to mail a notice of final partnership administrative adjustment with respect to the partnership taxable year to which the request relates before the expiration of the period described in section 6229 (a) (including any extension by agreement),

subparagraph (B) shall cease to apply with respect to such request, and the 2-year period referred to in clause (ii) of subparagraph (A) shall not expire before the date 6 months after the expiration of the period described in section 6229 (a) (including any extension by agreement).

(D) Extension of time 
The 2-year period described in subparagraph (A)(ii) shall be extended for such period as may be agreed upon in writing between the tax matters partner and the Secretary.
(3) Coordination with administrative adjustment 

(A) Administrative adjustment before filing of petition 
No petition may be filed under this subsection after the Secretary mails to the tax matters partner a notice of final partnership administrative adjustment for the partnership taxable year to which the request under section 6227 relates.
(B) Administrative adjustment after filing but before hearing of petition 
If the Secretary mails to the tax matters partner a notice of final partnership administrative adjustment for the partnership taxable year to which the request under section 6227 relates after the filing of a petition under this subsection but before the hearing of such petition, such petition shall be treated as an action brought under section 6226 with respect to that administrative adjustment, except that subsection (e) of section 6226 shall not apply.
(C) Notice must be before expiration of statute of limitations 
A notice of final partnership administrative adjustment for the partnership taxable year shall be taken into account under subparagraphs (A) and (B) only if such notice is mailed before the expiration of the period prescribed by section 6229 for making assessments of tax attributable to partnership items for such taxable year.
(4) Partners treated as party to action 

(A) In general 
If an action is brought by the tax matters partner under paragraph (1) with respect to any request for an adjustment of a partnership item for any taxable year
(i) each person who was a partner in such partnership at any time during the partnership taxable year involved shall be treated as a party to such action, and
(ii) the court having jurisdiction of such action shall allow each such person to participate in the action.
(B) Partners must have interest in outcome 
For purposes of subparagraph (A), rules similar to the rules of paragraph (1) of section 6226 (d) shall apply.
(5) Scope of judicial review 
Except in the case described in subparagraph (B) of paragraph (3), a court with which a petition is filed in accordance with this subsection shall have jurisdiction to determine only those partnership items to which the part of the request under section 6227 not allowed by the Secretary relates and those items with respect to which the Secretary asserts adjustments as offsets to the adjustments requested by the tax matters partner.
(6) Determination of court reviewable 
Any determination by a court under this subsection shall have the force and effect of a decision of the Tax Court or a final judgment or decree of the district court or the Court of Federal Claims, as the case may be, and shall be reviewable as such. With respect to the partnership, only the tax matters partner, a notice partner, or a 5-percent group may seek review of a determination by a court under this subsection.
(b) Other requests 

(1) Notice providing that items become nonpartnership items 
If the Secretary mails to a partner, under subparagraph (A) of section 6231 (b)(1) (relating to items ceasing to be partnership items), a notice that all partnership items of the partner for the partnership taxable year to which a timely request for administrative adjustment under subsection (d) of section 6227 relates shall be treated as nonpartnership items
(A) such request shall be treated as a claim for credit or refund of an overpayment attributable to nonpartnership items, and
(B) the partner may bring an action under section 7422 with respect to such claim at any time within 2 years of the mailing of such notice.
(2) Other cases 

(A) In general 
If the Secretary fails to allow any part of an administrative adjustment request filed under subsection (d) of section 6227 by a partner and paragraph (1) does not apply
(i) such partner may, pursuant to section 7422, begin a civil action for refund of any amount due by reason of the adjustments described in such part of the request, and
(ii) on the beginning of such civil action, the partnership items of such partner for the partnership taxable year to which such part of such request relates shall be treated as nonpartnership items for purposes of this subchapter.
(B) Period for filing petition 

(i) In general An action may be begun under subparagraph (A) with respect to an administrative adjustment request for a partnership taxable year only
(I) after the expiration of 6 months from the date of filing of the request under section 6227, and
(II) before the date which is 2 years after the date of filing of such request.
(ii) Extension of time The 2-year period described in subclause (II) of clause (i) shall be extended for such period as may be agreed upon in writing between the partner and the Secretary.
(C) Action barred after partnership proceeding has begun 
No petition may be filed under subparagraph (A) with respect to an administrative adjustment request for a partnership taxable year after the Secretary mails to the partnership a notice of the beginning of a partnership proceeding with respect to such year.
(D) Failure by Secretary to issue timely notice of adjustment 
If the Secretary
(i) mails the notice referred to in subparagraph (C) before the expiration of the 2-year period referred to in clause (i)(II) of subparagraph (B), and
(ii) fails to mail a notice of final partnership administrative adjustment with respect to the partnership taxable year to which the request relates before the expiration of the period described in section 6229 (a) (including any extension by agreement),

subparagraph (C) shall cease to apply with respect to such request, and the 2-year period referred to in clause (i)(II) of subparagraph (B) shall not expire before the date 6 months after the expiration of the period described in section 6229 (a) (including any extension by agreement).

26 USC 6229 - Period of limitations for making assessments

(a) General rule 
Except as otherwise provided in this section, the period for assessing any tax imposed by subtitle A with respect to any person which is attributable to any partnership item (or affected item) for a partnership taxable year shall not expire before the date which is 3 years after the later of
(1) the date on which the partnership return for such taxable year was filed, or
(2) the last day for filing such return for such year (determined without regard to extensions).
(b) Extension by agreement 

(1) In general 
The period described in subsection (a) (including an extension period under this subsection) may be extended
(A) with respect to any partner, by an agreement entered into by the Secretary and such partner, and
(B) with respect to all partners, by an agreement entered into by the Secretary and the tax matters partner (or any other person authorized by the partnership in writing to enter into such an agreement),

before the expiration of such period.

(2) Special rule with respect to debtors in title 11 cases 
Notwithstanding any other law or rule of law, if an agreement is entered into under paragraph (1)(B) and the agreement is signed by a person who would be the tax matters partner but for the fact that, at the time that the agreement is executed, the person is a debtor in a bankruptcy proceeding under title 11 of the United States Code, such agreement shall be binding on all partners in the partnership unless the Secretary has been notified of the bankruptcy proceeding in accordance with regulations prescribed by the Secretary.
(3) Coordination with section 6501 (c)(4) 
Any agreement under section 6501 (c)(4) shall apply with respect to the period described in subsection (a) only if the agreement expressly provides that such agreement applies to tax attributable to partnership items.
(c) Special rule in case of fraud, etc. 

(1) False return 
If any partner has, with the intent to evade tax, signed or participated directly or indirectly in the preparation of a partnership return which includes a false or fraudulent item
(A) in the case of partners so signing or participating in the preparation of the return, any tax imposed by subtitle A which is attributable to any partnership item (or affected item) for the partnership taxable year to which the return relates may be assessed at any time, and
(B) in the case of all other partners, subsection (a) shall be applied with respect to such return by substituting 6 years for 3 years.
(2) Substantial omission of income 
If any partnership omits from gross income an amount properly includible therein which is in excess of 25 percent of the amount of gross income stated in its return, subsection (a) shall be applied by substituting 6 years for 3 years.
(3) No return 
In the case of a failure by a partnership to file a return for any taxable year, any tax attributable to a partnership item (or affected item) arising in such year may be assessed at any time.
(4) Return filed by Secretary 
For purposes of this section, a return executed by the Secretary under subsection (b) of section 6020 on behalf of the partnership shall not be treated as a return of the partnership.
(d) Suspension when Secretary makes administrative adjustment 
If notice of a final partnership administrative adjustment with respect to any taxable year is mailed to the tax matters partner, the running of the period specified in subsection (a) (as modified by other provisions of this section) shall be suspended
(1) for the period during which an action may be brought under section 6226 (and, if a petition is filed under section 6226 with respect to such administrative adjustment, until the decision of the court becomes final), and
(2) for 1 year thereafter.
(e) Unidentified partner 
If
(1) the name, address, and taxpayer identification number of a partner are not furnished on the partnership return for a partnership taxable year, and
(2) 
(A) the Secretary, before the expiration of the period otherwise provided under this section with respect to such partner, mails to the tax matters partner the notice specified in paragraph (2) of section 6223 (a) with respect to such taxable year, or
(B) the partner has failed to comply with subsection (b) of section 6222 (relating to notification of inconsistent treatment) with respect to any partnership item for such taxable year,

the period for assessing any tax imposed by subtitle A which is attributable to any partnership item (or affected item) for such taxable year shall not expire with respect to such partner before the date which is 1 year after the date on which the name, address, and taxpayer identification number of such partner are furnished to the Secretary.

(f) Special rules 

(1) Items becoming nonpartnership items 
If before the expiration of the period otherwise provided in this section for assessing any tax imposed by subtitle A with respect to the partnership items of a partner for the partnership taxable year, such items become nonpartnership items by reason of 1 or more of the events described in subsection (b) of section 6231, the period for assessing any tax imposed by subtitle A which is attributable to such items (or any item affected by such items) shall not expire before the date which is 1 year after the date on which the items become nonpartnership items. The period described in the preceding sentence (including any extension period under this sentence) may be extended with respect to any partner by agreement entered into by the Secretary and such partner.
(2) Special rule for partial settlement agreements 
If a partner enters into a settlement agreement with the Secretary or the Attorney General (or his delegate) with respect to the treatment of some of the partnership items in dispute for a partnership taxable year but other partnership items for such year remain in dispute, the period of limitations for assessing any tax attributable to the settled items shall be determined as if such agreement had not been entered into.
(g) Period of limitations for penalties 
The provisions of this section shall apply also in the case of any addition to tax or an additional amount imposed under subchapter A of chapter 68 which arises with respect to any tax imposed under subtitle A in the same manner as if such addition or additional amount were a tax imposed by subtitle A.
(h) Suspension during pendency of bankruptcy proceeding 
If a petition is filed naming a partner as a debtor in a bankruptcy proceeding under title 11 of the United States Code, the running of the period of limitations provided in this section with respect to such partner shall be suspended
(1) for the period during which the Secretary is prohibited by reason of such bankruptcy proceeding from making an assessment, and
(2) for 60 days thereafter.

26 USC 6230 - Additional administrative provisions

(a) Coordination with deficiency proceedings 

(1) In general 
Except as provided in paragraph (2) or (3), subchapter B of this chapter shall not apply to the assessment or collection of any computational adjustment.
(2) Deficiency proceedings to apply in certain cases 

(A) Subchapter B shall apply to any deficiency attributable to
(i) affected items which require partner level determinations (other than penalties, additions to tax, and additional amounts that relate to adjustments to partnership items), or
(ii) items which have become nonpartnership items (other than by reason of section 6231 (b)(1)(C)) and are described in section 6231 (e)(1)(B).
(B) Subchapter B shall be applied separately with respect to each deficiency described in subparagraph (A) attributable to each partnership.
(C) Notwithstanding any other law or rule of law, any notice or proceeding under subchapter B with respect to a deficiency described in this paragraph shall not preclude or be precluded by any other notice, proceeding, or determination with respect to a partners tax liability for a taxable year.
(3) Special rule in case of assertion by partner’s spouse of innocent spouse relief 

(A) Notwithstanding section 6404 (b), if the spouse of a partner asserts that section 6015 applies with respect to a liability that is attributable to any adjustment to a partnership item (including any liability for any penalties, additions to tax, or additional amounts relating to such adjustment), then such spouse may file with the Secretary within 60 days after the notice of computational adjustment is mailed to the spouse a request for abatement of the assessment specified in such notice. Upon receipt of such request, the Secretary shall abate the assessment. Any reassessment of the tax with respect to which an abatement is made under this subparagraph shall be subject to the deficiency procedures prescribed by subchapter B. The period for making any such reassessment shall not expire before the expiration of 60 days after the date of such abatement.
(B) If the spouse files a petition with the Tax Court pursuant to section 6213 with respect to the request for abatement described in subparagraph (A), the Tax Court shall only have jurisdiction pursuant to this section to determine whether the requirements of section 6015 have been satisfied. For purposes of such determination, the treatment of partnership items (and the applicability of any penalties, additions to tax, or additional amounts) under the settlement, the final partnership administrative adjustment, or the decision of the court (whichever is appropriate) that gave rise to the liability in question shall be conclusive.
(C) Rules similar to the rules contained in subparagraphs (B) and (C) of paragraph (2) shall apply for purposes of this paragraph.
(b) Mathematical and clerical errors appearing on partnership return 

(1) In general 
Section 6225 shall not apply to any adjustment necessary to correct a mathematical or clerical error (as defined in section 6213 (g)(2)) appearing on the partnership return.
(2) Exception 
Paragraph (1) shall not apply to a partner if, within 60 days after the day on which notice of the correction of the error is mailed to the partner, such partner files with the Secretary a request that the correction not be made.
(c) Claims arising out of erroneous computations, etc. 

(1) In general 
A partner may file a claim for refund on the grounds that
(A) the Secretary erroneously computed any computational adjustment necessary
(i) to make the partnership items on the partners return consistent with the treatment of the partnership items on the partnership return, or
(ii) to apply to the partner a settlement, a final partnership administrative adjustment, or the decision of a court in an action brought under section 6226 or section 6228 (a),
(B) the Secretary failed to allow a credit or to make a refund to the partner in the amount of the overpayment attributable to the application to the partner of a settlement, a final partnership administrative adjustment, or the decision of a court in an action brought under section 6226 or section 6228 (a), or
(C) the Secretary erroneously imposed any penalty, addition to tax, or additional amount which relates to an adjustment to a partnership item.
(2) Time for filing claim 

(A) Under paragraph (1)(A) or (C) 
Any claim under subparagraph (A) or (C) of paragraph (1) shall be filed within 6 months after the day on which the Secretary mails the notice of computational adjustment to the partner.
(B) Under paragraph (1)(B) 
Any claim under paragraph (1)(B) shall be filed within 2 years after whichever of the following days is appropriate:
(i) the day on which the settlement is entered into,
(ii) the day on which the period during which an action may be brought under section 6226 with respect to the final partnership administrative adjustment expires, or
(iii) the day on which the decision of the court becomes final.
(3) Suit if claim not allowed 
If any portion of a claim under paragraph (1) is not allowed, the partner may bring suit with respect to such portion within the period specified in subsection (a) of section 6532 (relating to periods of limitations on refund suits).
(4) No review of substantive issues 
For purposes of any claim or suit under this subsection, the treatment of partnership items on the partnership return, under the settlement, under the final partnership administrative adjustment, or under the decision of the court (whichever is appropriate) shall be conclusive. In addition, the determination under the final partnership administrative adjustment or under the decision of the court (whichever is appropriate) concerning the applicability of any penalty, addition to tax, or additional amount which relates to an adjustment to a partnership item shall also be conclusive. Notwithstanding the preceding sentence, the partner shall be allowed to assert any partner level defenses that may apply or to challenge the amount of the computational adjustment.
(5) Rules for seeking innocent spouse relief 

(A) In general 
The spouse of a partner may file a claim for refund on the ground that the Secretary failed to relieve the spouse under section 6015 from a liability that is attributable to an adjustment to a partnership item (including any liability for any penalties, additions to tax, or additional amounts relating to such adjustment).
(B) Time for filing claim 
Any claim under subparagraph (A) shall be filed within 6 months after the day on which the Secretary mails to the spouse the notice of computational adjustment referred to in subsection (a)(3)(A).
(C) Suit if claim not allowed 
If the claim under subparagraph (B) is not allowed, the spouse may bring suit with respect to the claim within the period specified in paragraph (3).
(D) Prior determinations are binding 
For purposes of any claim or suit under this paragraph, the treatment of partnership items (and the applicability of any penalties, additions to tax, or additional amounts) under the settlement, the final partnership administrative adjustment, or the decision of the court (whichever is appropriate) that gave rise to the liability in question shall be conclusive.
(d) Special rules with respect to credits or refunds attributable to partnership items 

(1) In general 
Except as otherwise provided in this subsection, no credit or refund of an overpayment attributable to a partnership item (or an affected item) for a partnership taxable year shall be allowed or made to any partner after the expiration of the period of limitation prescribed in section 6229 with respect to such partner for assessment of any tax attributable to such item.
(2) Administrative adjustment request 
If a request for an administrative adjustment under section 6227 with respect to a partnership item is timely filed, credit or refund of any overpayment attributable to such partnership item (or an affected item) may be allowed or made at any time before the expiration of the period prescribed in section 6228 for bringing suit with respect to such request.
(3) Claim under subsection (c) 
If a timely claim is filed under subsection (c) for a credit or refund of an overpayment attributable to a partnership item (or affected item), credit or refund of such overpayment may be allowed or made at any time before the expiration of the period specified in section 6532 (relating to periods of limitations on suits) for bringing suit with respect to such claim.
(4) Timely suit 
Paragraph (1) shall not apply to any credit or refund of any overpayment attributable to a partnership item (or an item affected by such partnership item) if a partner brings a timely suit with respect to a timely administrative adjustment request under section 6228 or a timely claim under subsection (c) relating to such overpayment.
(5) Overpayments refunded without requirement that partner file claim 
In the case of any overpayment by a partner which is attributable to a partnership item (or an affected item) and which may be refunded under this subchapter, to the extent practicable credit or refund of such overpayment shall be allowed or made without any requirement that the partner file a claim therefor.
(6) Subchapter B of chapter 66 not applicable 
Subchapter B of chapter 66 (relating to limitations on credit or refund) shall not apply to any credit or refund of an overpayment attributable to a partnership item.
(e) Tax matters partner required to furnish names of partners to Secretary 
If the Secretary mails to any partnership the notice specified in paragraph (1) of section 6223 (a) with respect to any partnership taxable year, the tax matters partner shall furnish to the Secretary the name, address, profits interest, and taxpayer identification number of each person who was a partner in such partnership at any time during such taxable year. If the tax matters partner later discovers that the information furnished to the Secretary was incorrect or incomplete, the tax matters partner shall furnish such revised or additional information as may be necessary.
(f) Failure of tax matters partner, etc., to fulfill responsibility does not affect applicability of proceeding 
The failure of the tax matters partner, a pass-thru partner, the representative of a notice group, or any other representative of a partner to provide any notice or perform any act required under this subchapter or under regulations prescribed under this subchapter on behalf of such partner does not affect the applicability of any proceeding or adjustment under this subchapter to such partner.
(g) Date decision of court becomes final 
For purposes of section 6229 (d)(1) and section 6230 (c)(2)(B), the principles of section 7481 (a) shall be applied in determining the date on which a decision of a district court or the Court of Federal Claims becomes final.
(h) Examination authority not limited 
Nothing in this subchapter shall be construed as limiting the authority granted to the Secretary under section 7602.
(i) Time and manner of filing statements, making elections, etc. 
Except as otherwise provided in this subchapter, each
(1) statement,
(2) election,
(3) request, and
(4) furnishing of information,

shall be filed or made at such time, in such manner, and at such place as may be prescribed in regulations.

(j) Partnerships having principal place of business outside the United States 
For purposes of sections 6226 and 6228, a principal place of business located outside the United States shall be treated as located in the District of Columbia.
(k) Regulations 
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subchapter. Any reference in this subchapter to regulations is a reference to regulations prescribed by the Secretary.
(l) Court rules 
Any action brought under any provision of this subchapter shall be conducted in accordance with such rules of practice and procedure as may be prescribed by the Court in which the action is brought.

26 USC 6231 - Definitions and special rules

(a) Definitions 
For purposes of this subchapter
(1) Partnership 

(A) In general 
Except as provided in subparagraph (B), the term partnership means any partnership required to file a return under section 6031 (a).
(B) Exception for small partnerships 

(i) In general The term partnership shall not include any partnership having 10 or fewer partners each of whom is an individual (other than a nonresident alien), a C corporation, or an estate of a deceased partner. For purposes of the preceding sentence, a husband and wife (and their estates) shall be treated as 1 partner.
(ii) Election to have subchapter apply A partnership (within the meaning of subparagraph (A)) may for any taxable year elect to have clause (i) not apply. Such election shall apply for such taxable year and all subsequent taxable years unless revoked with the consent of the Secretary.
(2) Partner 
The term partner means
(A) a partner in the partnership, and
(B) any other person whose income tax liability under subtitle A is determined in whole or in part by taking into account directly or indirectly partnership items of the partnership.
(3) Partnership item 
The term partnership item means, with respect to a partnership, any item required to be taken into account for the partnerships taxable year under any provision of subtitle A to the extent regulations prescribed by the Secretary provide that, for purposes of this subtitle, such item is more appropriately determined at the partnership level than at the partner level.
(4) Nonpartnership item 
The term nonpartnership item means an item which is (or is treated as) not a partnership item.
(5) Affected item 
The term affected item means any item to the extent such item is affected by a partnership item.
(6) Computational adjustment 
The term computational adjustment means the change in the tax liability of a partner which properly reflects the treatment under this subchapter of a partnership item. All adjustments required to apply the results of a proceeding with respect to a partnership under this subchapter to an indirect partner shall be treated as computational adjustments.
(7) Tax matters partner 
The tax matters partner of any partnership is
(A) the general partner designated as the tax matters partner as provided in regulations, or
(B) if there is no general partner who has been so designated, the general partner having the largest profits interest in the partnership at the close of the taxable year involved (or, where there is more than 1 such partner, the 1 of such partners whose name would appear first in an alphabetical listing).

If there is no general partner designated under subparagraph (A) and the Secretary determines that it is impracticable to apply subparagraph (B), the partner selected by the Secretary shall be treated as the tax matters partner. The Secretary shall, within 30 days of selecting a tax matters partner under the preceding sentence, notify all partners required to receive notice under section 6223(a) of the name and address of the person selected.

(8) Notice partner 
The term notice partner means a partner who, at the time in question, would be entitled to notice under subsection (a) of section 6223 (determined without regard to subsections (b)(2) and (e)(1)(B) thereof).
(9) Pass-thru partner 
The term pass-thru partner means a partnership, estate, trust, S corporation, nominee, or other similar person through whom other persons hold an interest in the partnership with respect to which proceedings under this subchapter are conducted.
(10) Indirect partner 
The term indirect partner means a person holding an interest in a partnership through 1 or more pass-thru partners.
(11) 5-percent group 
A 5-percent group is a group of partners who for the partnership taxable year involved had profits interests which aggregated 5 percent or more.
(12) Husband and wife 
Except to the extent otherwise provided in regulations, a husband and wife who have a joint interest in a partnership shall be treated as 1 person.
(b) Items cease to be partnership items in certain cases 

(1) In general 
For purposes of this subchapter, the partnership items of a partner for a partnership taxable year shall become nonpartnership items as of the date
(A) the Secretary mails to such partner a notice that such items shall be treated as nonpartnership items,
(B) the partner files suit under section 6228 (b) after the Secretary fails to allow an administrative adjustment request with respect to any of such items,
(C) the Secretary or the Attorney General (or his delegate) enters into a settlement agreement with the partner with respect to such items, or
(D) such change occurs under subsection (e) of section 6223 (relating to effect of Secretarys failure to provide notice) or under subsection (c) of this section.
(2) Circumstances in which notice is permitted 
The Secretary may mail the notice referred to in subparagraph (A) of paragraph (1) to a partner with respect to partnership items for a partnership taxable year only if
(A) such partner
(i) has complied with subparagraph (B) of section 6222 (b)(1) (relating to notification of inconsistent treatment) with respect to one or more of such items, and
(ii) has not, as of the date on which the Secretary mails the notice, filed a request for administrative adjustments which would make the partners treatment of the item or items with respect to which the partner complied with subparagraph (B) of section 6222 (b)(1) consistent with the treatment of such item or items on the partnership return, or
(B) 
(i) such partner has filed a request under section 6227 (d) for administrative adjustment of one or more of such items, and
(ii) the adjustments requested would not make such partners treatment of such items consistent with the treatment of such items on the partnership return.
(3) Notice must be mailed before beginning of partnership proceeding 
Any notice to a partner under subparagraph (A) of paragraph (1) with respect to partnership items for a partnership taxable year shall be mailed before the day on which the Secretary mails to the tax matters partner a notice of the beginning of an administrative proceeding at the partnership level with respect to such items.
(c) Regulations with respect to certain special enforcement areas 

(1) Applicability of subsection 
This subsection applies in the case of
(A) assessments under section 6851 (relating to termination assessments of income tax) or section 6861 (relating to jeopardy assessments of income, estate, gift, and certain excise taxes),
(B) criminal investigations,
(C) indirect methods of proof of income,
(D) foreign partnerships, and
(E) other areas that the Secretary determines by regulation to present special enforcement considerations.
(2) Items may be treated as nonpartnership items 
To the extent that the Secretary determines and provides by regulations that to treat items as partnership items will interfere with the effective and efficient enforcement of this title in any case described in paragraph (1), such items shall be treated as nonpartnership items for purposes of this subchapter.
(3) Special rules 
The Secretary may prescribe by regulation such special rules as the Secretary determines to be necessary to achieve the purposes of this subchapter in any case described in paragraph (1).
(d) Time for determining partner’s profits interest in partnership 

(1) In general 
For purposes of section 6223 (b) (relating to special rules for partnerships with more than 100 partners) and paragraph (11) of subsection (a) (relating to 5-percent group), the interest of a partner in the profits of a partnership for a partnership taxable year shall be determined
(A) in the case of a partner whose entire interest in the partnership is disposed of during such partnership taxable year, as of the moment immediately before such disposition, or
(B) in the case of any other partner, as of the close of the partnership taxable year.
(2) Indirect partners 
The Secretary shall prescribe regulations consistent with the principles of paragraph (1) to be applied in the case of indirect partners.
(e) Effect of judicial decisions in certain proceedings 

(1) Determinations at partner level 
No judicial determination with respect to the income tax liability of any partner not conducted under this subchapter shall be a bar to any adjustment in such partners income tax liability resulting from
(A) a proceeding with respect to partnership items under this subchapter, or
(B) a proceeding with respect to items which become nonpartnership items
(i) by reason of 1 or more of the events described in subsection (b), and
(ii) after the appropriate time for including such items in any other proceeding with respect to nonpartnership items.
(2) Proceedings under section 6228 (a) 
No judicial determination in any proceeding under subsection (a) of section 6228 with respect to any partnership item shall be a bar to any adjustment in any other partnership item.
(f) Special rule for deductions, losses, and credits of foreign partnerships 
Except to the extent otherwise provided in regulations, in the case of any partnership the tax matters partner of which resides outside the United States or the books of which are maintained outside the United States, no deduction, loss, or credit shall be allowable to any partner unless section 6031 is complied with for the partnerships taxable year in which such deduction, loss, or credit arose at such time as the Secretary prescribes by regulations.
(g) Partnership return to be determinative of whether subchapter applies 

(1) Determination that subchapter applies 
If, on the basis of a partnership return for a taxable year, the Secretary reasonably determines that this subchapter applies to such partnership for such year but such determination is erroneous, then the provisions of this subchapter are hereby extended to such partnership (and its items) for such taxable year and to partners of such partnership.
(2) Determination that subchapter does not apply 
If, on the basis of a partnership return for a taxable year, the Secretary reasonably determines that this subchapter does not apply to such partnership for such year but such determination is erroneous, then the provisions of this subchapter shall not apply to such partnership (and its items) for such taxable year or to partners of such partnership.

26 USC 6232 - Repealed. Pub. L. 100418, title I, 1941(b)(1), Aug. 23, 1988, 102 Stat. 1323]

Section, added Pub. L. 97–248, title IV, § 402(a), Sept. 3, 1982, 96 Stat. 666, related to extension of subchapter provisions, respecting tax treatment of partnership items, to windfall profit tax.

26 USC 6233 - Extension to entities filing partnership returns, etc.

(a) General rule 
If a partnership return is filed by an entity for a taxable year but it is determined that the entity is not a partnership for such year, then, to the extent provided in regulations, the provisions of this subchapter are hereby extended in respect of such year to such entity and its items and to persons holding an interest in such entity.
(b) Similar rules in certain cases 
If a partnership return is filed for any taxable year but it is determined that there is no entity for such taxable year, to the extent provided in regulations, rules similar to the rules of subsection (a) shall apply.

26 USC 6234 - Declaratory judgment relating to treatment of items other than partnership items with respect to an oversheltered return

(a) General rule 
If
(1) a taxpayer files an oversheltered return for a taxable year,
(2) the Secretary makes a determination with respect to the treatment of items (other than partnership items) of such taxpayer for such taxable year, and
(3) the adjustments resulting from such determination do not give rise to a deficiency (as defined in section 6211) but would give rise to a deficiency if there were no net loss from partnership items,

the Secretary is authorized to send a notice of adjustment reflecting such determination to the taxpayer by certified or registered mail.

(b) Oversheltered return 
For purposes of this section, the term oversheltered return means an income tax return which
(1) shows no taxable income for the taxable year, and
(2) shows a net loss from partnership items.
(c) Judicial review in the Tax Court 
Within 90 days, or 150 days if the notice is addressed to a person outside the United States, after the day on which the notice of adjustment authorized in subsection (a) is mailed to the taxpayer, the taxpayer may file a petition with the Tax Court for redetermination of the adjustments. Upon the filing of such a petition, the Tax Court shall have jurisdiction to make a declaration with respect to all items (other than partnership items and affected items which require partner level determinations as described in section 6230 (a)(2)(A)(i)) for the taxable year to which the notice of adjustment relates, in accordance with the principles of section 6214 (a). Any such declaration shall have the force and effect of a decision of the Tax Court and shall be reviewable as such.
(d) Failure to file petition 

(1) In general 
Except as provided in paragraph (2), if the taxpayer does not file a petition with the Tax Court within the time prescribed in subsection (c), the determination of the Secretary set forth in the notice of adjustment that was mailed to the taxpayer shall be deemed to be correct.
(2) Exception 
Paragraph (1) shall not apply after the date that the taxpayer
(A) files a petition with the Tax Court within the time prescribed in subsection (c) with respect to a subsequent notice of adjustment relating to the same taxable year, or
(B) files a claim for refund of an overpayment of tax under section 6511 for the taxable year involved.

If a claim for refund is filed by the taxpayer, then solely for purposes of determining (for the taxable year involved) the amount of any computational adjustment in connection with a partnership proceeding under this subchapter (other than under this section) or the amount of any deficiency attributable to affected items in a proceeding under section 6230 (a)(2), the items that are the subject of the notice of adjustment shall be presumed to have been correctly reported on the taxpayers return during the pendency of the refund claim (and, if within the time prescribed by section 6532 the taxpayer commences a civil action for refund under section 7422, until the decision in the refund action becomes final).

(e) Limitations period 

(1) In general 
Any notice to a taxpayer under subsection (a) shall be mailed before the expiration of the period prescribed by section 6501 (relating to the period of limitations on assessment).
(2) Suspension when Secretary mails notice of adjustment 
If the Secretary mails a notice of adjustment to the taxpayer for a taxable year, the period of limitations on the making of assessments shall be suspended for the period during which the Secretary is prohibited from making the assessment (and, in any event, if a proceeding in respect of the notice of adjustment is placed on the docket of the Tax Court, until the decision of the Tax Court becomes final), and for 60 days thereafter.
(3) Restrictions on assessment 
Except as otherwise provided in section 6851, 6852, or 6861, no assessment of a deficiency with respect to any tax imposed by subtitle A attributable to any item (other than a partnership item or any item affected by a partnership item) shall be made
(A) until the expiration of the applicable 90-day or 150-day period set forth in subsection (c) for filing a petition with the Tax Court, or
(B) if a petition has been filed with the Tax Court, until the decision of the Tax Court has become final.
(f) Further notices of adjustment restricted 
If the Secretary mails a notice of adjustment to the taxpayer for a taxable year and the taxpayer files a petition with the Tax Court within the time prescribed in subsection (c), the Secretary may not mail another such notice to the taxpayer with respect to the same taxable year in the absence of a showing of fraud, malfeasance, or misrepresentation of a material fact.
(g) Coordination with other proceedings under this subchapter 

(1) In general 
The treatment of any item that has been determined pursuant to subsection (c) or (d) shall be taken into account in determining the amount of any computational adjustment that is made in connection with a partnership proceeding under this subchapter (other than under this section), or the amount of any deficiency attributable to affected items in a proceeding under section 6230 (a)(2), for the taxable year involved. Notwithstanding any other law or rule of law pertaining to the period of limitations on the making of assessments, for purposes of the preceding sentence, any adjustment made in accordance with this section shall be taken into account regardless of whether any assessment has been made with respect to such adjustment.
(2) Special rule in case of computational adjustment 
In the case of a computational adjustment that is made in connection with a partnership proceeding under this subchapter (other than under this section), the provisions of paragraph (1) shall apply only if the computational adjustment is made within the period prescribed by section 6229 for assessing any tax under subtitle A which is attributable to any partnership item or affected item for the taxable year involved.
(3) Conversion to deficiency proceeding 
If
(A) after the notice referred to in subsection (a) is mailed to a taxpayer for a taxable year but before the expiration of the period for filing a petition with the Tax Court under subsection (c) (or, if a petition is filed with the Tax Court, before the Tax Court makes a declaration for that taxable year), the treatment of any partnership item for the taxable year is finally determined, or any such item ceases to be a partnership item pursuant to section 6231 (b), and
(B) as a result of that final determination or cessation, a deficiency can be determined with respect to the items that are the subject of the notice of adjustment,

the notice of adjustment shall be treated as a notice of deficiency under section 6212 and any petition filed in respect of the notice shall be treated as an action brought under section 6213.

(4) Finally determined 
For purposes of this subsection, the treatment of partnership items shall be treated as finally determined if
(A) the Secretary or the Attorney General (or his delegate) enters into a settlement agreement (within the meaning of section 6224) with the taxpayer regarding such items,
(B) a notice of final partnership administrative adjustment has been issued and
(i) no petition has been filed under section 6226 and the time for doing so has expired, or
(ii) a petition has been filed under section 6226 and the decision of the court has become final, or
(C) the period within which any tax attributable to such items may be assessed against the taxpayer has expired.
(h) Special rules if Secretary incorrectly determines applicable procedure 

(1) Special rule if Secretary erroneously mails notice of adjustment 
If the Secretary erroneously determines that subchapter B does not apply to a taxable year of a taxpayer and consistent with that determination timely mails a notice of adjustment to the taxpayer pursuant to subsection (a) of this section, the notice of adjustment shall be treated as a notice of deficiency under section 6212 and any petition that is filed in respect of the notice shall be treated as an action brought under section 6213.
(2) Special rule if Secretary erroneously mails notice of deficiency 
If the Secretary erroneously determines that subchapter B applies to a taxable year of a taxpayer and consistent with that determination timely mails a notice of deficiency to the taxpayer pursuant to section 6212, the notice of deficiency shall be treated as a notice of adjustment under subsection (a) and any petition that is filed in respect of the notice shall be treated as an action brought under subsection (c).