A partnership can elect out of the centralized partnership audit regime for a tax year if it is an eligible partnership that year. To make a valid election out, complete: Form 1065, U.S. Return of Partnership Income, Schedule B, answer yes to question “Is the partnership electing out of the centralized partnership audit regime under section 6221(b)?” [question 29, 2021 version], or Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return, check the box to question G in ‘Additional Information’ sectionand Schedule B-2, Form 1065, Election Out of the Centralized Partnership Audit RegimePDF, list each eligible partner’s name, U.S. Taxpayer Identification Number and type of eligible partner. Include all shareholders for any partner that is an S corporation. Note: All elections out are valid unless the IRS determines otherwise. If we determine an election out is invalid, we will notify the partnership in writing. Eligible Partnerships Partnerships with 100 or fewer partners for the taxable year can elect out of the centralized partnership audit regime if all partners are eligible partners. Eligible partners are: Individuals C corporations Foreign entities that would be treated as a C corporation if it were domestic S corporations Estates of deceased partners To calculate the number of eligible partners, add the number of Schedules K-1 the partnership is required to issue to partners and include all shareholders for any partner that is an S corporation. Ineligible Partnerships Partnerships are not eligible to elect out of the centralized partnership audit regime if they are required to issue a Schedule K-1 to partners that are: Partnerships Trusts Foreign entities that would not be treated as a C corporation were it a domestic entity Disregarded entities Estates of individuals other than deceased partners People who hold an interest in the partnership on behalf of another person Regulations 26 CFR § 301.6221(b)-1 - Election out for certain partnerships with 100 or fewer partners (TD 9829) Return to BBA Centralized Partnership Audit Regime Subscribe to e-News for Bipartisan Budget Act (BBA) partnerships to receive notification of updates to the BBA web pages, including: BBA Centralized Partnership Audit Regime Designate a Partnership Representative Elect Out of the Centralized Partnership Audit Regime File an Administrative Adjustment Request under Bipartisan Budget Act of 2015 (BBA) BBA Partnership Audit Process Electronic Submission of Forms by Audited BBA Partnerships and their Pass Through Partners OFSS Status (when unavailable due to scheduled or unscheduled maintenance)