On December 15, 2017, the U.S. Treasury Department issued proposed regs that permit partnerships to “push out” IRS audit adjustments to partners who are themselves partnerships in “tiered” partnerships. Tiered partnerships are partnerships in which one or more partners in one or more levels of partners are themselves partnerships—i.e., partnerships whose partners are partnerships. This is, of course, very good news for tiered partnerships. We can only hope that the Treasury will also issue rules that permit partnerships to be BBA “electing partnerships” even though one or more of their members are revocable trusts or single-member LLCs whose members are individuals.
The new proposed regs are REG-120232-17 and REG-120233-17.