Instructions for Form 8082 - Introductory Material
General Instructions
Specific Instructions
Instructions for Form 8082 - Notices
- Paperwork Reduction Act Notice.

Instructions for Form 8082 (12/2024)

Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR)

Section references are to the Internal Revenue Code unless otherwise noted.

Revised: 12/2024

Instructions for Form 8082 - Introductory Material

Future Developments

For the latest information about developments related to Form 8082 and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form8082.

What’s New

Instructions reordered.

These instructions have been reorganized to better distinguish between the use of Form 8082 as a notice of inconsistent treatment and as an AAR.

Reminders

Part I, line 1.

Item C2 was added to Part I to indicate whether a BBA AAR has adjustments that don't result in an imputed underpayment.

Increased research credit reported by a BBA partnership.

If an increased research credit is reported by a BBA partnership, the BBA partnership doesn’t file an amended return. Instead, the BBA partnership must file an AAR and attach the following five items of information to that AAR.

Identify all the business components to which the section 41 research credit relates for that tax year.
For each business component, identify all research activities performed.
Name the individuals who performed each research activity.
The information each individual sought to discover.
The total qualified employee wage expenses, total qualified supply expenses, and total qualified contract research expenses for the claim year. This may be done using Form 6765, Credit for Increasing Research Activities.

As part of the AAR process, the BBA partnership will also submit Form 8985, Pass-Through Statement—Transmittal/Partnership Adjustment Tracking Report, and Form 8986, Partner’s Share of Adjustment(s) to Partnership-Related Item(s), to the IRS and send Forms 8986 to its partners. The BBA partnership isn’t required to provide the five items of information again on Forms 8985 and 8986. The BBA partners don’t need to attach the five items of information to their original returns to which their Forms 8986 are attached. For more information, see Research Credit Claims (Section 41) on Amended Returns Frequently Asked Questions at IRS.gov/businesses/corporations/research-credit-claims-section-41-on-amended-returns-frequently-asked-questions.

General Instructions

Unless otherwise noted, references to sections 6221 through 6241 are to Internal Revenue Code (the Code) sections as amended by BBA and are referred to as “BBA proceedings.”

Purpose of Form

Notice of inconsistent treatment.

If you’re a partner in a TEFRA or BBA partnership, an S corporation shareholder, a beneficiary of an estate or trust, an owner of a foreign trust, or a residual interest holder in a real estate mortgage investment conduit (REMIC), you must generally report items consistent with the way they were reported by the partnership to the IRS on Schedule K-1, Schedule K-3, Form 8986 (issued with a BBA AAR), Schedule Q, and/or a foreign trust statement. However, there may be reasons why you wish to report these items differently. To do so, use Form 8082 and the instructions under Inconsistent Treatment , later.

Note.

A partner is bound to finally determined adjustments on Form 8986 resulting from a BBA partnership audit and may not use Form 8082 to report the items differently.

Use Form 8082 to notify the IRS of any inconsistency between your tax treatment of an item and the way the pass-through entity treated and reported the same item on its return. Also use the form to notify the IRS if you didn’t receive Schedule K-1, Schedule Q, and/or a foreign trust statement from the foreign trust by the due date for filing your return (including extensions). Additionally, based on the instructions for Schedule K-2, if the pass-through entity was required to provide a Schedule K-3 but didn’t, use Form 8082 to notify the IRS of this.

AAR under TEFRA.

Form 8082 is also used if you’re filing an AAR electronically to correct a previously e-filed Form 1065, U.S. Return of Partnership Income. An AAR is:

A request by the tax matters partner (TMP) to correct items on the original partnership return;
A request by a TEFRA partner (other than a partner in an ELP), or residual interest holder, to correct pass-through items on that person's income tax return; or
A request by an ELP to correct items on the original TEFRA partnership return.

Use the instructions under TEFRA AAR to complete Form 8082 for this purpose.

Protective TEFRA AARs.

Generally, a protective AAR is a request for credit or refund based on current litigation or expected changes in tax law or other legislation. The TMP or partner with authority (PWA) files a protective AAR when the right to a refund is contingent on future events and may not be determinable until after the period for filing an AAR has expired. Protective AARs are subject to AAR statutes set forth in sections 6227, 6228, and 6229 (prior to amendment by BBA).

If you're a TMP filing on behalf of the partnership, the petition period described in section 6228 (prior to amendment by BBA) can be extended by using Form 9248, Agreement to Extend the Time to File a Petition for Adjustment by the Tax Matters Partner With Respect to Partnership Items. A protective AAR must clearly state that it is a protective AAR, alert the IRS to the essential nature of the adjustment, and specify the line item to be protected.

AAR under BBA.

Use Form 8082 if you’re the partnership representative (PR) or designated individual (DI) requesting an administrative adjustment to correct a previously filed partnership return on behalf of the BBA partnership. Go to IRS.gov/bbaaar for additional information. Also see the Instructions for Form 1065.

BBA created a new centralized partnership audit regime generally effective for partnership tax years beginning after 2017, replacing the consolidated audit proceedings under sections 6221 through 6234 enacted by TEFRA. All partnerships with tax years beginning after 2017 are subject to the centralized partnership audit regime unless they make a valid election under section 6221(b). See section 6221(b) and the Instructions for Form 1065 for information on which partnerships are eligible to make this election.

For instructions on completing Form 8082 for this purpose, see BBA AAR under Specific Instructions, later.

Definitions

Adjustment year.

For BBA partnerships, the adjustment year is the partnership tax year in which:

An adjustment pursuant to the decision of a court in a proceeding brought under section 6234, such decision becomes final;
An AAR is filed under section 6227; or
A notice of final partnership adjustment is mailed under section 6231 or, if the partnership waives the limitations on assessments under section 6232(b), the waiver is executed by the IRS.

BBA partnership.

A partnership subject to the centralized partnership audit regime is a BBA partnership. All partnerships with tax years beginning after 2017 are BBA partnerships unless they make a valid election out of the centralized partnership audit regime. A partner in a BBA partnership is referred to as a “BBA partner.” An AAR filed by a BBA partnership is referred to as a “BBA AAR” and if one is filed, it must be filed by the PR.

Designated individual (DI).

Where the PR is an entity, the DI is the sole individual appointed by the partnership at the time of the designation of the PR through whom such PR acts.

Foreign trust statement.

Any of the following annual statements furnished by a foreign trust to its owners or beneficiaries.

Foreign Grantor Trust Owner Statement.
Foreign Grantor Trust Beneficiary Statement.
Foreign Nongrantor Trust Beneficiary Statement.

Form 8985, Pass-Through Statement—Transmittal/Partnership Adjustment Tracking Report.

Form 8985 is used by a BBA partnership to summarize and transmit Forms 8986 (by an audited partnership, a partnership filing an AAR, or a pass-through partner) in situations where the partners are taking into account the adjustments. Form 8985 is also used to report payments made and related calculations by a pass-through partner of a BBA partnership, if applicable. See the instructions for these forms for further information.

Form 8986, Partner’s Share of Adjustment(s) to Partnership-Related Item(s).

Form 8986 was created for BBA partnerships and pass-through partners of BBA partnerships to show each partner’s share of adjustments to PRI as a result of a BBA audit or BBA AAR for situations where the partners are taking into account the adjustments.

Non-BBA partnership.

Under BBA, certain partnerships with 100 or fewer eligible partners for the tax year can elect out of the centralized partnership audit regime. For additional information, see the Instructions for Form 1065. A partnership that elects out of the centralized partnership audit regime is referred to as a “non-BBA partnership.”

Non-TEFRA partnership.

A partnership with a tax year beginning before 2018 that isn’t subject to TEFRA proceedings and didn't elect into BBA for that tax year beginning after November 2, 2015, and before January 1, 2018, is referred to as a “non-TEFRA partnership.”

Partner with authority (PWA).

Each ELP must designate a partner (or other person) as the PWA who shall have the sole authority to act on behalf of the partnership. See section 6255(b)(1) (prior to repeal by the BBA). If the partnership fails to designate a PWA, the IRS can select any partner to serve as the partner with such authority. The PWA has the authority to file an AAR on behalf of the partnership. The PWA does this by filing Form 8082.

Partnership-related items (PRIs).

For BBA partnerships, under section 6241(2)(B), a PRI is any item or amount with respect to the partnership that is relevant in determining the income tax liability of any person, without regard to whether the item or amount appears on the partnership's return. An item or amount is with respect to the partnership if it is shown or reflected, or required to be shown or reflected, on the partnership return or the forms and instructions prescribed by the IRS for the partnership's tax year or is required under the Internal Revenue laws to be maintained in the partnership's books or records. This includes an imputed underpayment (IU) and an item or amount relating to any transaction with, basis in, or liability of the partnership.

Partnership representative (PR).

Under section 6223, BBA partnerships must designate a partner or other person with a substantial presence in the United States as the PR who shall have the sole authority to act on behalf of the partnership. If the designated PR is an entity, the partnership must also appoint a DI to act on behalf of the entity PR. The appointed DI must be an individual and may not be an entity. The partnership and all partners are bound by the actions of the PR in dealings with the IRS under BBA. Go to IRS.gov/bbaaar for additional information.

Pass-through entity.

A partnership (including an ELP), S corporation, estate, trust, or REMIC.

Reporting year.

Reporting year is applicable to partners of BBA partnerships. It’s the partner’s tax year(s) that includes the date the AAR partnership furnished Forms 8986 to its partners.

Reviewed year.

For BBA partnerships, the reviewed year is the partnership’s tax year to which a partnership adjustment relates.

Reviewed year pass-through partner.

For purposes of these instructions, under BBA, a reviewed year pass-through partner is a pass-through entity that held an interest in a BBA partnership at any time during the reviewed year, which is the partnership tax year to which the partnership adjustment relates. For example, if the BBA AAR is filed to make an adjustment to income for the 2022 tax year, 2022 is the reviewed year.

Schedule K-1.

An annual schedule reporting the partner's, shareholder's, or beneficiary's share of income, deductions, credits, etc., from a partnership, S corporation, estate, or domestic trust.

Schedule K-2.

An extension of Form 1065, Schedule K, used to report items of international tax relevance from the operation of a partnership.

Schedule K-3.

An extension of Schedule K-1 (Form 1065) generally used to report to partners their shares of the items reported on Schedule K-2.

Schedule Q.

A quarterly schedule reporting the residual interest holder's share of taxable income or net loss from the REMIC.

Tax matters partner (TMP).

If the partnership is subject to the TEFRA procedures, it can designate a partner as the TMP for the tax year for which the return is filed. The TMP is a general partner (in most cases, the TMP must also be a U.S. person) designated by the partnership to represent the partners in the consolidated audit and litigation proceedings under sections 6221 through 6234 (prior to repeal by the BBA) referred to as “TEFRA proceedings.” The designation is made by completing the Designation of Tax Matters Partner section on Form 1065 used for tax years beginning before 2018.

Additionally, for tax years beginning before 2018, a REMIC may designate a tax matters person in the same manner in which a partnership may designate a TMP under Regulations section 301.6231(a) (7)-1. When applying that section, treat all holders of a residual interest in the REMIC as general partners. The designation may be made by completing the Designation of Tax Matters Person section on Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return, for tax years beginning before 2018.

For a limited liability company (LLC), a member of the LLC is treated as a partner and a member-manager is treated as a general partner. A member-manager is any owner of an interest in the LLC who, alone or together with others, has continuing exclusive authority to make management decisions necessary to conduct the business for which the LLC was formed. If there are no elected or designated member-managers, each owner is treated as a member-manager. For details, see Regulations section 301.6231(a)(7)-2 (prior to repeal by the BBA).

TEFRA partnership.

The consolidated audit proceedings of sections 6221 through 6234 (prior to amendment by BBA) are referred to as “TEFRA proceedings”; partnerships that are subject to TEFRA proceedings are referred to as “TEFRA partnerships.” An AAR filed by the TMP of the TEFRA partnership is a TEFRA AAR. Any partner in a TEFRA partnership may file an AAR using Form 8082. TEFRA proceedings don't apply to partnerships with tax years beginning after 2017.

Who Must File

Notice of inconsistent treatment.

Generally, file Form 8082 if any of the following apply.

You believe an item wasn’t properly reported on the Schedule K-1 or Schedule K-3 you received from the partnership, or on a Form 8986 received from an AAR partnership (but not an audited partnership), S corporation, estate, or domestic trust; the Schedule Q you received from the REMIC; or the foreign trust statement you received from the foreign trust.
You believe an item shown on your schedule or statement is incorrect but it isn’t an item that otherwise has to be reported on your tax return. For example, if you believe that the percentage shown as your ownership of capital at the end of the year wasn’t properly reported on Schedule K-1, file Form 8082 to report this, even though you aren’t otherwise required to report that percentage on your tax return. If you discover this kind of inconsistency after filing your original return, file an amended return to report it. In the space provided on the amended return for writing explanations, enter “See attached Form 8082.” If the correction doesn’t affect your tax return, no amounts need to be entered on the amended return if the Form 8082 item is the only reason for filing the amended return.
The pass-through entity hasn’t filed a tax return or given you a Schedule K-1, Schedule Q, or foreign trust statement by the time you're required to file your tax return (including extensions) and there are items you must include on your return.
If the pass-through entity didn’t provide you Schedule K-3 and it was required to do so according to the instructions for Schedule K-2.

This is an Image: caution.gif If you don't notify the IRS that you're reporting an item (Part I, line 1, box a) inconsistently, any deficiency (including any late filing or late payment penalties applicable to the deficiency) that results from an adjustment to make your amount or other treatment of the item consistent with the amount or treatment of the item on the pass-through entity's return may be assessed immediately. An inconsistent item can exist on either your original or amended return.

AAR under TEFRA.

File Form 8082 if any of the following apply.

You’re requesting an administrative adjustment to correct a previously filed partnership return for a TEFRA partnership. S corporations, estates, and trusts can’t file an AAR (see Who May Not File below for details).
You’re a partner in a TEFRA partnership (other than a partner in an ELP) or residual interest holder in a REMIC requesting an administrative adjustment to correct pass-through items on your income tax return.

AAR under BBA.

File Form 8082 if you're the PR or DI requesting an administrative adjustment to correct a previously filed partnership return on behalf of the BBA partnership.

This is an Image: taxtip.gif When a partnership’s federal return is changed for any reason, it may affect its state return. For more information, contact the state tax agency with which the state return is filed.

Who May Not File

Don't use Form 8082 to file a notice of inconsistent treatment or an AAR if any of the following apply.

If you’re a REMIC and want to correct items on the original REMIC return. Instead, file Form 1065-X.
For any amount of loss, deduction, or credit from Schedule K-1, Schedule K-3, Schedule Q, Form 8986, or the foreign trust statement that you don't report on your return because the amount is otherwise limited by law (such as a loss limited by the at-risk or passive activity rules).
If you’re a partner, and all five of the following elements apply.

° The tax year of the partnership began prior to January 1, 2018.

° The partnership didn’t make an early election into BBA.

° Your partnership had no more than 10 partners at any one time during the tax year. A married couple (and their estates) are treated as one partner.

° Each partner was either an individual (other than a nonresident alien) or an estate of a deceased partner, or a C corporation.

° The partnership didn’t have an election in effect under section 6231(a)(1)(B)(ii) (prior to amendment by BBA) for the tax year to have the TEFRA consolidated audit rules apply.

If you're a partner in a partnership with a tax year beginning after December 31, 2017, that has an election out of BBA in effect pursuant to section 6221(b).
If you’re a BBA partnership, you may not file an AAR solely for the purpose of changing the PR. See the Instructions for Form 8979, Partnership Representative Revocation, Designation, and Resignation, for more information.
You may not file a BBA AAR after the prescribed time to do so (see How and When To File , later).
If you’re a BBA partnership that has received a notice of administrative proceeding, you may not file an AAR.
If you’re a partner and the BBA partnership in which you’re an investor has received a notice of administrative proceeding, a Form 8082 with respect to inconsistent treatment of partnership items from that BBA partnership can’t be filed.
A partner may not file an AAR on behalf of the BBA partnership in which it’s a partner unless doing so is in its capacity as the PR for that partnership.
If you’re a shareholder in an S corporation, except as a notice of inconsistent treatment when the shareholder's return isn’t consistent with the return of the S corporation. Form 8082 can’t be filed by a shareholder to request an administrative adjustment to their tax return to correct S corporation items. Instead, the shareholder must file an amended income tax return.
If you’re a beneficiary of an estate or domestic trust, or a beneficiary or an owner of a foreign trust, except as a notice of inconsistent treatment when the beneficiary's or owner's return isn’t consistent with the return of the estate or trust. Form 8082 can’t be filed by a beneficiary or owner to request an administrative adjustment to their tax return to correct estate or trust items. Instead, the beneficiary or owner must file an amended income tax return.
If you're a residual interest holder and your REMIC had no more than one residual interest holder at any one time during the tax year.
If you're a residual interest holder in a REMIC that at any time during the tax year beginning prior to January 1, 2018, had more than one residual interest holder; and

° Each residual interest holder was either an individual (other than a nonresident alien), an estate, or a C corporation; and

° The REMIC didn't have an election in effect under section 6231(a)(1)(B)(ii) (prior to amendment by BBA) for the tax year to have the TEFRA consolidated audit rules apply; and

° The REMIC didn't have an election in effect pursuant to section 1101(g)(4) for the tax year to early elect into BBA.

If you're a residual interest holder in a REMIC with a tax year beginning after December 31, 2017, that has an election out of BBA in effect pursuant to section 6221(b).
If you’re a partner in an ELP for tax years before 2018. Partners must report all partnership items consistently with their treatment on the partnership return as shown on Schedule K-1 (Form 1065-B). Only the partnership may file an AAR.

Interest and Penalties

If you disregard the requirements for filing Form 8082, you may be subject to the accuracy-related penalty under section 6662 or the fraud penalty under section 6663. Either penalty is in addition to any tax that results from a computational adjustment to make your amount or treatment of the item consistent with the amount or treatment of the item on the pass-through entity's return.

Interest.

Generally, interest is charged on taxes not paid by the due date, even if an extension of time to file is granted. Interest is also charged on penalties imposed for negligence, fraud, substantial valuation misstatements, substantial understatements of tax, and reportable transaction understatements. The interest is charged from the due date (including extensions) to the date of payment. The interest charge is figured at a rate determined under section 6621.

Late payment penalty.

The penalty for not paying the tax when due is usually 1/2 of 1% of the unpaid tax for each month or part of a month that the tax remains unpaid. The penalty can’t exceed 25% of the unpaid tax.

Other penalties.

Penalties can also be imposed for negligence, substantial understatements of tax, reportable transaction understatements, and fraud. See sections 6662, 6662A, and 6663.

Interest and penalties applicable to the IU.

Except when the partnership elects to have its partners take into account the adjustments, BBA partnership interest and penalties are the following.

The interest figured for an IU is the interest that would be determined under chapter 67 for the period beginning on the day after the return due date for the reviewed year and ending on the return due date for the adjustment year as defined under section 6225(d)(2) or, if earlier, the date the IU is paid.
Any penalty, addition to tax, or additional amount that is determined at the partnership level is applied as if that BBA partnership had been an individual subject to tax under chapter 1 for the reviewed year and the IU were an actual underpayment (or understatement) for that year for purposes of part II of subchapter A of chapter 68.

Election to apply the alternative to payment of the IU.

If the partners must take into account the adjustments because the BBA partnership filed an AAR and there are adjustments that don't result in an IU or if a BBA partnership elects the alternative to payment of the IU under sections 6227(b)(2) and 6226(c), interest shall be determined:

At the partner level;
From the due date of the return for the tax year to which the increase is attributable, determined by taking into account any increases attributable to a change in tax attributes for a tax year under section 6226(b)(2) until the date of payment; and
At the section 6621(a)(2) underpayment rate.

How Many Forms To Complete

You must complete and file a separate form for each pass-through entity for which you’re reporting an inconsistent or AAR item. If you’re reporting more than four inconsistent or AAR monetary items from one pass-through entity, use additional Forms 8082 because Part II only provides four lines (8 through 11). You don’t need to complete lines 8 through 11 if not reporting a change to the amount or treatment of a monetary item; however, you must include an explanation of the change(s) in Part III.

How and When To File

How to file.

Don’t file Form 8082 by itself.

If you file Form 8082 as a notice of inconsistent treatment, complete a single copy of the form, attach it to your tax return, and file it when you file your original return.
If a TMP, PR, or ELP files Form 8082 as an AAR on behalf of the partnership, the TMP, PR, or ELP must complete the form, attach it to the partnership's amended tax return, and file it with the service center where the original return was filed.
If a partner in a TEFRA partnership or residual interest holder files Form 8082 as an AAR, it must be filed in duplicate. The original copy is filed with the partner's or residual interest holder's amended income tax return, and the other copy is filed with the service center where the pass-through entity return is filed. See Notice of inconsistent treatment filed with return under Inconsistent Treatment—Part II, later.

When to file.

Generally, a pass-through entity may file an AAR to change items on its return:

Within 3 years after the later of:

• The date on which the pass-through entity return for that year is filed, or

• The last day for filing the pass-through entity return for that year (excluding extensions);

In the case of a TEFRA partnership or a REMIC (subject to TEFRA), before a notice of final partnership administrative adjustment for that year is mailed to the TMP or tax matters person; or, in the case of an ELP, before the mailing to the partnership of a notice of partnership administrative adjustment for that year; or
In the case of a BBA partnership, before a notice of an administrative proceeding for the tax year is mailed under section 6231.

Special rules.

A partnership return or a REMIC return is generally due by the 15th day of the 3rd month following the close of the partnership's or REMIC's tax year. The tax year of a REMIC always ends on December 31.

Special rules apply if the period of limitations has been extended by agreement and in the case of a TEFRA AAR that relates to the deductibility of bad debts or worthless securities. See sections 6227 (prior to amendment by BBA) and 6251 for details.

What To Attach

If applicable, attach the following items to Form 8082.

Note.

If the attachments needed to support the corrected amount include copies of forms or schedules from previously filed tax returns, enter at the top of each previously filed form or schedule, “Copy Only—Don't Process.”

If the corrected amount involves an item that must be supported with a schedule, statement, or form, attach the appropriate schedule, statement, or form. Include the entity's name and employer identification number (EIN) on any attachments. See the instructions for Forms 1065, 1065-B, or 1066 (as applicable) for a list of forms that may be required.
A BBA partnership must attach a schedule to Form 8082 that supports the position(s) reported. If the partnership doesn’t make an election under section 6227(b)(2) to have the adjustments taken into account by the reviewed year partners and would like to modify per section 6227(b)(1), it must attach a Form 8980, Partnership Request for Modification of Imputed Underpayments Under IRC Section 6225(c), that supports any modifications made to the IU as described in sections 6225(b) and 6225(c) and as applied to a BBA AAR under section 6227(b)(1). See Modifications to an Imputed Underpayment Included in an Administrative Adjustment Request in Pub. 5346, Instructions for Form 8980.
Attach Forms 8985 and 8986, as applicable. Form 8986 is used by BBA partnerships to furnish and transmit each partner’s share of adjustments to PRIs. See the instructions for Forms 8985 and 8986 for more information.
If the AAR is a request for an electronically deposited refund of $1 million or more, attach Form 8302, Electronic Deposit of Tax Refund of $1 Million or More.

Judicial Review of an AAR (for Returns Subject to the TEFRA Procedures or ELPs)

If the IRS fails to act on an AAR, the TMP or PWA may file a petition for judicial review with the U.S. Tax Court, U.S. Court of Federal Claims, or U.S. District Court. The TMP or PWA must file the petition before the date that is 2 years after the date the TMP or PWA filed the AAR, but not until after the date that is 6 months from the date of such filing. The 2-year period may be extended if the IRS and the TMP or PWA agree in writing. For more details, see sections 6228 (prior to amendment by BBA) and 6252.

Special Rules for ELPs for Tax Years Beginning Before 2018

An ELP may file an AAR to adjust partnership items. However, a partner may not file an AAR. Generally, the ELP has two choices for handling the adjustment.

It can combine the adjustment with the same partnership item for the year in which the IRS allows the adjustment and pass it through to the current partners for that year. However, if the adjustment involves a reduction in a credit that exceeds the amount of that credit for the partnership tax year in which the adjustment is allowed, the partnership must pay tax in an amount equal to that excess amount.
It may elect to not pass the adjustment through to current partners by paying tax on any IU that results from the adjustment, as explained in section 6242(b)(4), prior to amendment by BBA.

In either case, the partnership is liable for any interest and penalties on the IU that result from the adjustment. See section 6242(b) for details. Interest is figured on the IU for the period beginning on the day after the due date (excluding extensions) of the partnership return for the adjusted year and ending on the due date (excluding extensions) of the partnership return for the tax year the adjustment takes effect, or, if earlier, the date the partnership paid the tax due under (2) above. The adjusted year is the partnership tax year in which the item being adjusted arose.

How to file.

Attach Form 8082 to an amended Form 1065-B for the adjusted year. Enter in the top margin of the amended return, “See attached Form 8082 for AAR per IRC section 6251.” Be sure to check box G(4) on page 1 of the amended return. Identify in Part II of Form 8082 the amount and treatment of any item the partnership is changing from the way it was reported on the original return. If the partnership elects to pay the tax, enter it on line 26 of page 1 of the amended Form 1065-B. Don't enter any other amounts on the amended Form 1065-B. Attach a computation of the tax to Form 8082. The IRS will bill the partnership for any interest and penalties it owes.

If the income, deductions, credits, or other information provided to any partner on Schedule K-1 is incorrect, file an amended Schedule K-1 (Form 1065-B) for that partner(s) with Form 8082. Also give the partner(s) a copy.

AAR With Election Into the Centralized Partnership Audit Regime Under BBA

Certain partnerships may elect to have the new centralized partnership audit regime apply to a return filed for an eligible tax year when filing an AAR under section 6227. An eligible tax year is any tax period beginning after November 2, 2015, and before January 1, 2018. Only partnerships can file an AAR under section 6227. A partnership may not make this election where:

An AAR has been filed on behalf of the partnership under section 6227(c) (prior to amendment by BBA), or
An amended return for the partnership has been filed. See Regulations section 301.9100-22(c)(4).

An AAR filed for an eligible tax year before January 1, 2018, will be treated as an AAR filed on behalf of a TEFRA partnership or as an amended return filed on behalf of a non-TEFRA partnership, as applicable. An AAR filed after January 1, 2018, for an eligible tax year without a statement attached to the AAR on which the partnership makes the election into the centralized partnership audit regime will be treated as an AAR filed on behalf of a TEFRA partnership or as an amended return filed on behalf of a non-TEFRA partnership, as applicable. Once made, an election may only be revoked with the consent of the IRS.

Note.

An AAR filed for a 2018 short tax period return by a partnership that is subject to the centralized partnership audit regime must meet the requirements under section 6227.

Making the election.

To make the election, the partnership must enter across the top of Form 1065 used to file the AAR, “Election under Section 1101(g)(4)” and attach a statement to the AAR. For the statement requirement, the partnership can use Form 7036, Election Under Section 1101(g)(4) of the Bipartisan Budget Act of 2015. If Form 7036 isn’t used, the partnership may prepare its own statement with the following information.

The partnership's name and taxpayer identification number (TIN), and the partnership tax year for which the election is being made.
The name, TIN, address, and daytime telephone number of the individual who signs the statement.
Language indicating that the partnership is electing application of section 1101(c) of BBA for the partnership return for the eligible tax year.
The information required to properly designate the PR as defined by section 6223, which must include the name, TIN, address, and daytime telephone number of the PR.

The following representations must be made on the statement of election.

° The partnership isn’t insolvent and doesn’t reasonably anticipate becoming insolvent before resolution of any adjustment with respect to the partnership tax year for which the election is being made.

° The partnership hasn’t voluntarily filed, and doesn’t reasonably anticipate filing, a petition for relief under title 11 of the United States Code.

° The partnership isn’t subject to, and doesn’t reasonably anticipate becoming subject to, an involuntary petition for relief under title 11 of the United States Code.

° The partnership has sufficient assets, and reasonably anticipates having sufficient assets, to pay a potential IU with respect to the partnership tax year that may be determined under subchapter C of chapter 63 of the Code, as amended by BBA.

A representation, signed under penalties of perjury, that the individual signing the statement is duly authorized to make the election described in Regulations section 301.9100-22 and that, to the best of the individual's knowledge and belief, all of the information contained in the statement is true, correct, and complete.
The statement must be signed and dated by the TMP, as defined under section 6231(a)(7) (prior to amendment by BBA), and the applicable regulations, or an individual who has the authority to sign the partnership return for the tax year. The fact that an individual dates and signs the statement making the election shall be prima facie evidence that the individual is authorized to make the election on behalf of the partnership.

Imputed underpayment (IU).

Partnerships filing an AAR with an election into the centralized partnership audit regime under BBA will need to determine if any partnership adjustment as defined by section 6241(2) results in an IU as described in section 6225(b). See section 6225(c), excluding paragraphs (2), (7), and (9), for guidance regarding the modification rules that may apply to an IU.

If modification is applied to an IU, the AAR must include detailed documentation to support all modifications made to the IU.

Unless the partnership elects under section 6227(b)(2) to have the partners take the adjustments into account, if the partnership adjustment results in an IU, the partnership must report and pay the IU and any interest and penalty associated with the IU at the time the AAR is submitted. See Interest and penalties applicable to the IU , earlier.

Unless the calculation of the IU contains a permitted rate modification per section 6225(c)(4), the IU will be figured using the highest rate in effect under section 1 or 11 for the tax year to which the adjustment relates. Enter “BBA Imputed Underpayment” in the bottom margin of page 1 (Form 1065) and include the IU and any interest or penalties related to the IU.

If the partnership elects under section 6227(b)(2) to have the partners take the adjustments into account or there are adjustments that don't result in an IU, the partnership is required to furnish statements to each partner of the partnership for the reviewed year, and file statements with the AAR. See the instructions for Forms 8985 and 8986 for more information.

Note.

BBA partnerships must file an AAR instead of an amended return and won’t attach amended Schedules K-1 to the AAR. Go to IRS.gov/BBAAAR for instructions for electronically submitting a BBA AAR.

Filing an AAR electronically.

If the AAR is filed electronically, and an election is being made under section 1101(g)(4) of BBA, the partnership uses Form 1065 and Form 8082 including the statement “Election Under Section 1101(g)(4).”

Specific Instructions

Specific instructions for most of the lines have been provided. Lines that aren’t explained are self-explanatory.

Note.

If the pass-through entity didn’t file a return or give you a Schedule K-1, Schedule K-3 (and according to the instructions for Schedule K-2, the pass-through entity was required to provide one to you), Schedule Q, and/or foreign trust statement by the time you're required to file your return, complete Parts I and II to the best of your knowledge.

Inconsistent Treatment

Name and Identifying Number

Enter the legal name of the entity and identifying number on the appropriate lines.

Part I—General Information

Line 1

Check box (a) if you believe an item wasn't properly reported on Schedule K-1, Schedule K-3, Schedule Q, Form 8986 (only issued with respect to an AAR), and/or foreign trust statement you received, or if you haven't received a Schedule K-1, Schedule K-3 (that the pass-through entity was required to provide according to the instructions for Schedule K-2), Schedule Q, or foreign trust statement by the time you're required to file your tax return (including extensions). Go to line 2.

Lines 2 Through 6

Generally, the information for these lines can be found on Schedule K-1, Form 8986, Schedule Q, or the foreign trust statement.

Line 6. Tax year of pass-through entity.

If you're a partner filing a notice of inconsistent treatment from a Form 8986 received as a result of a BBA partnership AAR, enter the pass-through entity tax year that includes the date contained in Form 8986, Part II, box D.

Part II—Inconsistent or Administrative Adjustment Request (AAR) Items

Partner filing a notice of inconsistent treatment for a Schedule K-1 or Schedule K-3 received from a BBA partnership.

When a partner receives a Schedule K-1 or Schedule K-3 from a BBA partnership, it must generally file consistently with that Schedule K-1 or Schedule K-3. However, a partner may file inconsistently if it provides valid notice to the IRS of inconsistent treatment.

Notice of inconsistent treatment filed with return.

If a pass-through partner doesn’t receive a Schedule K-1 or Schedule K-3 (and the pass-through entity was required to provide one according to the instructions for Schedule K-2) from a BBA partnership or does receive a Schedule K-1 or Schedule K-3 but disagrees with some or all of the reported treatment or amounts, it may file a notice of inconsistent treatment with its return (original or amended/AAR). To do so, as a pass-through partner, you’ll include Form 8082 with your return (for example, Form 1065, Form 1120-S), prepare your return using the treatment or amounts you determine are correct, and do the following.

On Form 8082, check box (a) under Part I, line 1 (and box (b), if applicable).
See Lines 8 Through 11—Inconsistent Treatment , later, for how to complete Part II, columns (a) through (e).
File Form 8082 along with the applicable return and attach any other supporting documents required.

Pass-through partner filing a notice of inconsistent treatment for a Form 8986 received from a BBA partnership filing an AAR.

When a pass-through partner receives Form 8986 as a result of an AAR filed by a BBA partnership in which it’s an indirect or direct investor, that pass-through partner will (prior to the date contained in Form 8986, Part II, box F) take one of the following actions.

Push out all the adjustments that are on the Form 8986 to its partners, shareholders, or beneficiaries. The pass-through partner will prepare and file with the IRS Form 8985 and Forms 8986.
For the adjustments resulting in an IU, pay the IU on those adjustments and prepare and issue to its partners, shareholders, or beneficiaries Forms 8986 for those adjustments that don't result in an IU. The pass-through partner will prepare and file with the IRS Form 8985 and Forms 8986.

Note.

Pass-through partners aren’t permitted to apply modifications to the IU.
When Form 8986 only contains adjustments that don't result in an IU, prepare and issue to its partners, shareholders, or beneficiaries Forms 8986 for those adjustments. However, a pass-through partner may file inconsistently from a Form 8986 received as a result of an AAR filed by a BBA partnership in which it is an indirect or direct investor if it provides valid notice to the IRS of inconsistent treatment.

Note.

Any partner (including a pass-through partner) that receives Form 8986, as a result of an audit, isn't permitted to treat items on that Form 8986 inconsistently and must report consistently with the information provided on Form 8986.

Other than pass-through partner filing a notice of inconsistent treatment from a BBA partnership.

If you're a partner (other than a pass-through partner) filing inconsistently from a BBA partnership (that is, inconsistently from a Schedule K-1, Schedule K-3, and/or Form 8986 you received as a result of a BBA partnership filling an AAR, and not as a result of an audit), complete Form 8082 and attach it to your original or amended return. If filing inconsistently from a Form 8986 (received as a result of a BBA partnership filing an AAR and not as a result of an audit), attach Form 8082 to your reporting year return that corresponds to the Form 8986 received. Attach a copy of the Form 8986 received from which you’re filing inconsistently. See Reporting year , earlier. See Lines 8 Through 11—Inconsistent Treatment below for how to complete Part II, columns (a) through (e).

Lines 8 Through 11—Inconsistent Treatment

Note.

Lines 8 through 11 are only required if reporting a change to the amount or treatment of a monetary number.

Column (a).

If you received a Schedule K-1, Schedule K-3, Schedule Q, Form 8986 (as a result of a BBA AAR, and not as a result of an audit), and/or foreign trust statement, enter the line number and description shown on the form. Otherwise, enter a complete description of the item.

If you didn’t receive a Schedule K-1, Schedule K-3, Schedule Q, and/or foreign trust statement but are still reporting estimated amounts on your original filing, enter a completed description of the item and where you're reporting the estimated amount on your original return. For example, if you're a BBA partnership-partner providing notice of inconsistent treatment for a Form 8986 received (as a result of a BBA AAR, and not as a result of an audit), enter the information from the first three columns of Form 8986, Part V, that you're treating inconsistently.

Column (b).

If you believe that the amount of any item shown on Schedule K-1, Schedule K-3, Schedule Q, Form 8986 (as a result of a BBA AAR, and not as a result of an audit), and/or a foreign trust statement wasn’t properly reported, check the box under “Amount of item.”

If you believe that treatment of any item (other than the amount of the item) wasn’t properly reported (such as a long-term capital loss that a partner thinks should be an ordinary loss), check the box under “Treatment of item.”

Check both parts of column (b) if either (1) or (2) below applies.

You believe that both the amount and another treatment (besides the amount) of the item shown on Schedule K-1, Schedule K-3, Schedule Q, Form 8986 (as a result of a BBA AAR, and not as a result of an audit), and/or a foreign trust statement weren’t properly reported, or you believe an item was omitted from the form.
The pass-through entity didn’t file a return or give you a Schedule K-1, Schedule K-3 (and the pass-through entity was required to provide one to you according to the instructions for Schedule K-2), Schedule Q, and/or foreign trust statement.

Note.

If you check only “Treatment of item,” you don't need to complete columns (d) and (e).

Column (c).

If you attach Form 8082 to your return, to make a notice of inconsistent treatment, enter the amount as shown on the Schedule K-1, Schedule K-3, Schedule Q, and/or foreign trust statement you received.

If the pass-through entity didn’t file a return, or if you didn’t receive a schedule or statement, or if you're reporting items that you believe were omitted, enter zero in column (c).

If you receive Form 8986 as a result of a BBA AAR (and not as a result of an audit), do the following to make a notice of inconsistent treatment.

Pass-through partner preparing Form 8985, attach Form 8082 to the Form 8985 you file.
Other than pass-through partner, attach Form 8082 to the copy of the return (or amended return) you file.

If treating any liabilities or capital items reported to you in Form 8986, Part IV, inconsistently, enter the item amount from Form 8986, Part IV, “Corrected” column, in Form 8082, Part II, column (c).

If treating an item of income, gain, loss, deduction, or credits, or other items reported to you in Form 8986, Part V, inconsistently, enter the amount from Form 8986, Part V, column (h), in Form 8082, Part II, column (c).

If treating any items reported to you in Form 8986, Part VI, inconsistently, enter that item amount from Form 8986 in Form 8082, Part II, column (c).

Column (d).

Enter the amount you’re reporting as the correct amount in column (d).

Column (e).

Enter the net increase or decrease for each line being changed in column (e). Enter as a positive the amount by which column (d) exceeds column (c) or enter as a negative the amount by which column (c) exceeds column (d). Use parentheses around all amounts that are negative. Explain the reason for the change (increase or decrease) in Part III.

Part III—Explanations

Explain in detail the reasons you're reporting an inconsistent or corrected amount or item as follows.

If you believe that the amount or other type of treatment of any item shown on Schedule K-1, Schedule K-3, Schedule Q, Form 8986 (as a result of a BBA AAR, and not as a result of an audit), and/or a foreign trust statement wasn’t properly reported, state how you think the item should be treated and why.
If the pass-through entity hasn’t filed a tax return by the time you're required to file your tax return, enter as the explanation, “Partnership (S corporation, Estate, Trust, or REMIC) return not filed.”
If the pass-through entity didn’t give you a Schedule K-1, Schedule K-3 (and the pass-through entity was required to provide one to you according to the instructions for Schedule K-2), Schedule Q, and/or foreign trust statement by the time you're required to file your tax return, enter as the explanation, “Schedule K-1 (Schedule K-3, Schedule Q, and/or foreign trust statement) not received.”

TEFRA AAR

Name and Identifying Number

Enter the legal name of the entity and identifying number on the appropriate lines.

Part I—General Information

Line 1

Subject to the particular filing rules, an AAR can be filed by partnerships subject to TEFRA proceedings (TEFRA AAR), and ELPs. An AAR can also be filed by the following partners.

Partners of a TEFRA partnership.
Residual interest holders (of REMICs subject to TEFRA).

For Partnership Tax Years Beginning Before January 1, 2018 (Unless Electing Into BBA)

TEFRA AAR.

The consolidated audit proceedings of sections 6221 through 6234 (prior to amendment by BBA) are referred to as “TEFRA proceedings.” Partnerships that are subject to TEFRA proceedings are referred to as “TEFRA partnerships.” An AAR filed by the TMP of the TEFRA partnership is a TEFRA AAR. Form 8082 is also used by any partner in a TEFRA partnership filing an AAR. TEFRA proceedings won’t apply to partnerships with tax years beginning after 2017. A partnership with a tax year beginning before 2018 that isn’t subject to TEFRA proceedings is referred to as a “non-TEFRA partnership.”

TEFRA partnerships requesting substituted return treatment.

A substituted return requests that the treatment of an item shown on the AAR be substituted for the treatment of the item on the pass-through entity's return. If the IRS allows substituted return treatment, the changes shown on the amended return will be treated as corrections of mathematical or clerical errors, and the IRS may assess any resulting tax to the partners or residual interest holders without a deficiency or entity-level proceeding, or partners or residual interest holders may file an amended return requesting a refund. See section 6227(c)(1) (prior to amendment by BBA).

If you’re a TMP filing a TEFRA AAR on behalf of the partnership and requesting substituted return treatment, attach a statement to Form 8082 indicating that you're requesting substituted return treatment.

If the request isn’t treated as a substituted return, the partners or residual interest holders may file amended returns requesting a refund. The IRS may conduct an examination of the pass-through entity’s return, or take no action on the request. When a request isn’t treated as a substituted return, the IRS can’t assess tax without a deficiency or entity-level proceeding. See section 6227(c)(2) (prior to amendment by BBA).

In either case, if you’re a TMP filing an AAR electronically, file an amended Form 1065, but don't enter any amounts on the form itself. Attach Form 8082 and identify the amount and treatment of any item you're changing from the way it was reported on the original return. The TMP must sign the amended return.

Attach amended Schedules K-1 showing the corrected amounts for each partner.

ELP AAR.

The ELP procedures were repealed for tax years beginning after 2017. However, ELPs filing an AAR after 2017 for a tax year that began before 2018 will use Form 8082.

Part II—Inconsistent or Administrative Adjustment Request (AAR) Items

TEFRA partnerships and ELPs filing AARs.

If a TEFRA partnership/ELP is filing an AAR to change items that were reported on its original return, do the following.

Determine the required changes to be made.
Complete Form 8082 to identify the changes being made.

a. On Form 8082, check box (b) under Part I, line 1.

b. See Lines 8 Through 11—AAR below for how to complete Part II, columns (a) through (e).

Complete Form 1065.

a. File an amended Form 1065 (checking box G5).

b. The TMP must sign the amended return.

c. Attach amended Schedules K-1 showing the corrected amounts for each partner.

File Form 8082 along with Form 1065 and attach any other supporting documents required.
Give a copy of the amended Schedules K-1 to the applicable partners.

TEFRA partner filing an AAR.

If a partner in a TEFRA partnership is filing an AAR to change items associated with its investment in the TEFRA partnership that were reported on its original return, do the following.

Determine the required changes to be made.
Complete Form 8082 to identify the changes being made.

a. On Form 8082, check box (b) under Part I, line 1.

b. See Lines 8 Through 11—AAR below for how to complete Part II, columns (a) through (e).
Complete the applicable amended return.
File Form 8082 along with the applicable amended return and attach any other supporting documents required.

Partner filing a notice of inconsistent treatment for a Schedule K-1 received from a TEFRA partnership.

If a partner doesn’t receive a Schedule K-1 from a TEFRA partnership or does receive a Schedule K-1 but disagrees with some or all of the reported treatment and/or amounts, it may file a notice of inconsistent treatment by doing the following.

On Form 8082, check box (a) under Part I, line 1.
See Lines 8 Through 11—AAR below for how to complete Part II, columns (a) through (e).
File Form 8082 along with the applicable return and attach any other supporting documents required.

Lines 8 Through 11—AAR

Note.

Lines 8 through 11 are only required if reporting a change to the amount or treatment of a monetary number.

Column (a).

Enter the line number and description from the form for which you’re making the change. For example, if you’re changing the amount reported on Schedule K, line 1, enter “Schedule K, line 1.”

Column (b).

Check the box under “Amount of item” if you’re changing the amount from what was previously filed. Check the box under “Treatment of item” if you’re reporting the amount unchanged but are changing another treatment of the item. Check both boxes if you’re changing the amount and another treatment besides amount.

Note.

If you check only “Treatment of item,” you don't need to complete columns (d) and (e).

Column (c).

Report the amount you previously reported for the item listed in column (a).

Column (d).

Enter the amount you’re reporting as the correct amount in column (d).

Column (e).

Part III—Explanations

Explain in detail the reasons you're reporting a corrected amount or item as follows.

If the pass-through entity hasn’t filed a tax return by the time you're required to file your tax return, enter as the explanation, “Partnership (S corporation, Estate, Trust, or REMIC) return not filed.”
If the pass-through entity didn’t give you a Schedule K-1, Schedule K-3 (and the pass-through entity was required to provide one to you according to the instructions for Schedule K-2), Schedule Q, and/or foreign trust statement by the time you're required to file your tax return, enter as the explanation, “Schedule K-1 (Schedule K-3, Schedule Q, and/or foreign trust statement) not received.”

BBA AAR

Name and Identifying Number

Enter the legal name of the entity and identifying number on the appropriate lines.

Part I—General Information

Line 1

Check box (b) if you're filing an AAR on which you're requesting a change in the amount or treatment of any item from the way you reported it on your return as originally filed or as you later amended it. Subject to the particular filing rules, an AAR can be filed by partnerships subject to BBA proceedings (BBA AAR). An AAR can also be filed by the partnership-partners in a BBA partnership (but only for the purpose of providing notice of inconsistent treatment with the AAR). See Regulations section 301.6227-1(a) referring to Regulations section 301.6222-1.

For Partnership Tax Years Beginning After 2017 and Partnerships Electing Into BBA for Tax Years Beginning After November 2, 2015, and Before January 1, 2018

BBA AAR.

All partnerships with tax years beginning after 2017 are subject to the centralized partnership audit regime unless an eligible partnership makes a valid election under section 6221(b) to elect out of the centralized partnership audit regime.

Partnerships electing into BBA for tax years beginning after November 2, 2015, and before January 1, 2018, are also subject to the centralized partnership audit regime. Partnerships that are subject to the centralized partnership audit procedures of sections 6221 through 6241 are referred to as “BBA partnerships.” A partnership with a tax year beginning after 2017 that isn't subject to BBA proceedings because it has made a valid election under section 6221(b) is referred to as a “non-BBA partnership.” An AAR filed by a BBA partnership is a BBA AAR.

This is an Image: caution.gif If a BBA partnership files an AAR and it needs to make its partners aware of their allocable shares of adjustments, it will furnish to each partner for the reviewed year a Form 8986 reflecting the partner's share of the adjustments (and shouldn't provide amended Schedules K-1 or K-3). The partnership is also required to file with the AAR any Forms 8986 required to be furnished to partners along with Form 8985. See the instructions for these forms for further information.

The partnership will need to furnish Forms 8986 to make its partners aware of their allocable shares of adjustments when (a) the adjustments in the BBA AAR result in an IU of zero or less than zero, or the adjustments don't result in an IU; or (b) the adjustments in the BBA AAR do result in an IU greater than zero but (as an alternative to payment) the BBA partnership makes a valid election under section 6227(b)(2) to have each reviewed year partner take its share of adjustments into account. See items B, C, and D that follow.

Item A.

If “Yes” is checked, complete Form 8979 and attach it to the AAR. See the Instructions for Form 8979.

Item B.

BBA partnerships filing an AAR will need to determine if the partnership adjustments result in an IU. See Figuring the IU , later, for information on how to figure the IU. The BBA partnership should consider all available guidance issued by the IRS in making a determination of whether or not the AAR results in an IU. Also see IU Under the Centralized Partnership Audit Regime , later, for discussion of the IU.

Note.

An IU calculation must always be made and presented on the AAR. This even applies when the IU is zero or less than zero, or the adjustments don't result in an IU. See Figuring the IU , later, under Part III for information.

Item C1.

If the adjustments contained in the BBA AAR result in an IU, the partnership must pay the IU at the same time the AAR is filed. However, under section 6227(b)(2), the partnership can elect to have its reviewed year partners take the adjustments into account. This is an election to push out the adjustments to the partners as an alternative to payment of the IU. See section 6226(a)(2) for details. If this valid election is made, the partnership is no longer liable for the IU.

This is an Image: caution.gif If the partnership's election under 6227(b)(2) to push out the adjustments to the partners is determined to be invalid, the partnership will still remain liable for the IU.

Item C2.

The partnership will need to furnish Forms 8986 to each reviewed year partner reflecting the partner's share of adjustments for when the adjustments don't result in an IU (for example, the adjustments in the BBA AAR result in an IU of zero or less than zero; or there is a net negative adjustment).

The partnership is also required to file with the AAR all Forms 8986 furnished to partners and Form 8985. See the instructions for these forms for further information.

Note.

The BBA partnership doesn't furnish Schedules K-1 to its partners when filing a BBA AAR. Instead, it'll provide Forms 8986.

Item D.

Each reviewed year partner is required to take into account its share of adjustments requested in a BBA AAR if the partnership adjustments result in a positive IU and the partnership makes the alternative to payment election discussed under Item C1, earlier. Additionally, each reviewed year partner is required to take into account its share of any adjustments requested in a BBA AAR resulting in an IU of zero or less than zero, or that don't result in an IU. The determination of whether or not an adjustment results in an IU amount is discussed earlier under Item B.

The partnership is required to furnish each reviewed year partner with a Form 8986 reporting its share of the BBA AAR adjustments. The PR (or DI if the PR is an entity) must attest to the partnership’s compliance with this requirement. The PR will manually sign Form 8082 under item D to declare under penalties of perjury that all statements have been provided to the reviewed year partners as required by these instructions. If filing electronically, Form 8082 should be attached as a PDF to Form 1065.

Item E.

Under section 6227(b)(1), the partnership may modify the IU resulting from adjustments reported in a BBA AAR in accordance with the provisions under section 6225(c), disregarding the provisions under paragraphs (2), (7), and (9). Any modification made to the IU under section 6227(b)(1) must be disclosed and fully explained on Form 8980 included with the AAR.

Note.

If the partnership makes a valid election to push out the adjustments to the partners as alternative to payment of the IU, the modifications to the IU are disregarded and aren’t included on the statements provided to the partners.

This is an Image: caution.gif If the partnership makes an election to push out the adjustments rather than pay an IU but the election is determined to be invalid, the partnership remains liable for an IU and such IU may potentially be assessed. If the partnership filed its IU calculation and Form 8980 to request permitted modifications be applied to the IU, those modifications will be considered in determining the liability.

Part II—Inconsistent or Administrative Adjustment Request (AAR) Items

If a BBA partnership is filing an AAR to change items that were reported on its original return, do the following.

Determine the required changes to be made.

Complete Form 8082 to identify the changes being made.

a. On Form 8082, check box (b) under Part I, line 1.

b. See Lines 8 Through 11—BBA AAR below for how to complete Part II, columns (a) through (e).

Figure an IU and determine if there are any adjustments that don't result in an IU.

Determine if you'll pay the IU or push out the adjustments to the partners.

a. If paying an IU, complete Form 1065 and report the IU appropriately. Include any permitted modifications that you would like applied to the IU and include a completed Form 8980 with your filing. Complete Forms 8985 and 8986 (pushout package) pertaining to the adjustments that don't result in an IU (if applicable).

b. If pushing out all the adjustments to the reviewed year partners, complete Form 1065 (see Administrative Adjustment Request (AAR) in the Instructions for Form 1065). Also complete Forms 8985 and 8986. Don't include Schedules K-1 because they aren't appropriate for a BBA AAR.

Note.

See Caution above.

File Form 8082 along with Form 1065, and attach any other supporting documents required, including copies of Forms 8985 and 8986 (if applicable).
If applicable, distribute the Forms 8986 to reviewed year partners according to the Form 8986 instructions.

Subject to the particular filing rules, an AAR can be filed by partnerships subject to BBA proceedings (BBA AAR). An AAR can also be filed by the partnership-partners in a BBA partnership (but only for the purpose of providing notice of inconsistent treatment with the AAR). See Regulations section 301.6227-1(a) referring to Regulations section 301.6222-1.

Lines 8 Through 11—BBA AAR

Note.

Lines 8 through 11 are only required if reporting a change to the amount or treatment of a monetary number.

Column (a).

Enter the line number and description from the form for which you're making the change. For example, if you're changing the amount reported on Schedule K, line 1, enter “Schedule K, line 1.”

Column (b).

Check the box under “Amount of item” if you're changing the amount from what was previously filed. Check the box under “Treatment of item” if you're reporting the amount unchanged but are changing another treatment of the item. Check both boxes if you're changing the amount and another treatment besides amount.

Column (c).

Report the amount you previously reported for the item listed in column (a).

Column (d).

Enter the amount you're reporting as the correct amount in column (d).

Column (e).

Part III—Explanations

Explain in detail the reasons you're reporting an inconsistent or corrected amount or item as follows.

If the pass-through entity hasn’t filed a tax return by the time you're required to file your tax return, enter as the explanation, “Partnership (S corporation, Estate, Trust, or REMIC) return not filed.”
If the pass-through entity didn’t give you a Schedule K-1, Schedule K-3 (and the pass-through entity was required to provide one to you according to the instructions for Schedule K-2), Schedule Q, and/or foreign trust statement by the time you're required to file your tax return, enter as the explanation, “Schedule K-1 (Schedule K-3, Schedule Q, and/or foreign trust statement) not received.”

IU Under the Centralized Partnership Audit Regime

BBA AARs must always include a computation of the IU (even when the IU is zero or less than zero, or the adjustments don't result in an IU), as determined under section 6225(b). See Figuring the IU , later, for information on how to figure the IU. Also go to IRS.gov/businesses/partnerships/how-to-figure-an-imputed-underpayment. Documentation should be included with the AAR that supports the computation of the IU amount. The BBA partnership should consider all available guidance issued by the IRS when figuring the IU amount for an AAR. If the calculated IU amount results in an amount greater than zero and the partnership doesn't elect under section 6227(b)(2) to have its reviewed year partners take the adjustments into account, the IU amount should be reported on Form 1065, page 1, line 26.

If the adjustments requested in the AAR result in an IU, generally the partnership must pay the IU. Adjustments requested in the AAR that don't result in an IU must be taken into account by each reviewed year partner as if the partnership had made an election under section 6227(b)(2), but only with regard to those adjustments that don't result in an IU. In this instance, see Forms 8985 and 8986 and the related instructions for reporting amounts not included in the IU.

When filing an AAR, the partnership may elect under section 6227(b)(2) to have the reviewed year partners take into account adjustments resulting in an IU. If the partnership makes the election, the partnership isn't liable for, nor required to pay, the IU related to the adjustments. Additionally, if the IU calculation results in an amount that is zero or less than zero, or the adjustments don't result in an IU, then all adjustments are taken into account by the reviewed year partners. However, the partnership may have withholding and reporting obligations under chapter 3 or 4 with respect to the adjustments taken into account by the reviewed year foreign partners. See Forms 8985 and 8986 and their related instructions for how to report these adjustments to reviewed year partners.

If the partnership validly elects under section 6227(b)(2) to have its reviewed year partners take all the adjustments into account, all modifications by the partnership (that would have been allowed had the partnership paid an IU) aren’t allowed and are disregarded.

Under section 6227(b)(1), the partnership may modify the IU resulting from adjustments reported in a BBA AAR in accordance with the provisions under section 6225(c), disregarding the provisions under sections 6225(c)(2), (7), and (9). Any modification made to the IU under section 6227(b)(1) must be disclosed and fully explained in documentation included with the AAR. If modifications are applied to the IU, complete and attach Form 8980 and report the modified IU amount on Form 1065, page 1, line 26.

Note.

Regarding modifications, see Item E under Part I, earlier.

The applicability of interest and penalties is discussed above. The BBA AAR may include a prepayment for interest and penalties. If making prepayments, the AAR should include documentation that supports the calculations. A payment made with Form 1065 should detail the portions of the payment that are for the IU, the prepaid estimated interest, and the prepaid estimated penalties. The total of all three should be reflected on Form 1065, page 1, line 26.

Under section 6232(b), partnerships filing a BBA AAR that have adjustments that result in an IU, and don't elect the alternative to payment of the IU (by not electing to push out the adjustments to the reviewed year partners), must pay the IU, which should be shown on Form 1065, page 1, line 26, at the same time that the AAR is filed. When paying by check, include the name of the partnership, “Form 1065,” the TIN of the partnership, the tax year, and “BBA AAR Imputed Underpayment.” Checks must be made payable to “United States Treasury” and included with the BBA AAR. If making an electronic payment, choose the payment description “BBA AAR Imputed Underpayment” from the list of payment types.

Figuring the IU

Definitions

Adjustments not resulting in an IU.

After grouping, subgrouping, and netting the adjustments, the result of netting with respect to any grouping or subgrouping that includes a particular partnership adjustment is a net negative adjustment or the IU calculation results in an amount that is zero or less than zero. Any adjustments that don't result in an IU are taken into account by the reviewed year partners in accordance with Regulations section 301.6227-3.

Credit grouping.

Any adjustment to a PRI that is reported or could be reported by a partnership as a credit on the partnership’s return, including a reallocation adjustment to such PRI, is placed in the credit grouping.

Creditable expenditure grouping.

Any adjustment to a PRI where any person could take the item that is adjusted (or item as adjusted if the item wasn’t originally reported by the partnership) as a credit, including a reallocation adjustment to a creditable expenditure, is placed in the creditable expenditure grouping.

Negative adjustment.

A negative adjustment is any adjustment that is a decrease in an item of gain or income; an increase in an item of loss or deduction; an increase in an item of credit or creditable expenditure; a decrease in an item of tax, penalty, addition to tax, or additional amount for which the partnership is liable under chapter 1; or a decrease to an IU calculated by the partnership for the tax year.

Net negative adjustment.

Any amount which results from netting adjustments within a grouping or subgrouping that isn't a net positive adjustment. A net negative adjustment includes a negative adjustment that wasn’t netted with any other adjustment.

Net positive adjustment.

An amount that is greater than zero which results from netting adjustments within a grouping or subgrouping. A net positive adjustment includes a positive adjustment that wasn’t netted with any other adjustment. A net positive adjustment includes a net decrease in an item of credit (or creditable expenditure).

Positive adjustment.

A positive adjustment is any adjustment that isn't a negative adjustment.

Reallocation grouping.

In general, any adjustment that allocates or reallocates a PRI to and from a partner or partners is a reallocation adjustment, except for an adjustment to a credit or to a creditable expenditure. Each reallocation adjustment generally results in at least two separate adjustments, each of which becomes a separate subgrouping.

Residual grouping.

Any adjustment to a PRI that doesn’t belong in the reallocation, credit, or creditable expenditure grouping is placed in the residual grouping. This grouping also includes any adjustment to a PRI that derives from an item that wouldn’t have been required to be allocated by the partnership to a partner under section 704(b), such as an adjustment to a liability amount on the balance sheet.

Subgrouping.

Each adjustment is subgrouped according to how the adjustment would be required to be taken into account separately under section 702(a). In general, a subgrouping follows Schedules K, K-1, K-2, and K-3 line items, including any alpha codes related to a Schedule K-1, K-2, or K-3 line item.

Total netted partnership adjustments (TNPA).

The sum of all net positive adjustments in the reallocation grouping and the residual grouping.

Formula for Figuring the IU

Figuring the IU

TNPA x rate* =
+ Sum of net positive adjustments to creditable expenditure and credit groupings:
= Total IU
* Highest rate in effect for the reviewed year under section 1 or 11.

The process of taking the adjustments shown on the AAR and inputting them into the formula shown in the previous table requires an understanding of the concepts of grouping, subgrouping, and netting. There are seven steps necessary in figuring an IU. The first three steps focus on grouping, subgrouping, and netting.

Steps in Figuring the IU

Step 1—Grouping

Place each adjustment into one of four groupings: reallocation, credit, creditable expenditure, and residual groupings.

Note.

Under Regulations section 301.6225-1(b)(4), solely for purposes of calculating any IU, a partnership that files an AAR may treat a positive adjustment as zero if the positive adjustment is related to, or results from, a positive adjustment to another item. The IRS may determine that the adjustment should not have been treated as zero by the partnership in its calculation of the IU. Go to IRS.gov/businesses/partnerships/how-to-figure-an-imputed-underpayment.

Reallocation grouping.

A reallocation adjustment generally consists of at least two adjustments, one positive and one negative, with each in a separate subgrouping.

One part of the reallocation adjustment reverses the effect of the improper allocation of a PRI.
The other part of the adjustment makes the proper allocation of the PRI.
Under the AAR rules, if one of the reallocation adjustments is negative, such negative adjustments must be pushed out to the proper partner(s).

This is an Image: caution.gif Don't net reallocation adjustments. As each part of a reallocation adjustment is placed in a separate subgrouping within the reallocation grouping, those adjustments can’t be netted in accordance with the netting rules.

Example.

$100 of ordinary income is being reallocated from Partner A to Partner B. For purposes of figuring the IU, there will be two adjustments, each in a separate subgrouping: a negative adjustment of $100 (reversing improper allocation to Partner A) and a positive adjustment of $100 (making proper allocation to Partner B). These two adjustments can’t be netted. As a result, the total net positive adjustment in the reallocation grouping is $100 and will be included in the TNPA.

Credit grouping.

Generally, a decrease in credits is treated as a positive adjustment, and an increase in credits is treated as a negative adjustment.
A reallocation adjustment relating to the credit grouping is placed into two separate subgroupings and won’t be netted together nor will they be netted with other credit adjustments.

Creditable expenditure grouping.

Generally, a decrease in creditable expenditures is treated as a positive adjustment, and an increase in creditable expenditures is treated as a negative adjustment.
A reallocation adjustment relating to a creditable expenditure grouping is placed into two separate subgroupings and won’t be netted together.
A creditable expenditure is treated in this manner even if the partners claimed a deduction in lieu of a credit.
Each adjustment to a creditable expenditure is subgrouped based upon the separate category of income to which the creditable expenditure relates and to account for any different allocation of the creditable expenditure between partners. Two or more adjustments to creditable expenditures are included within the same subgrouping only if each adjustment relates to creditable expenditures in the same separate category, and each adjusted PRI would be allocated to the partners in the same ratio had those items been properly reflected on the originally filed partnership return.

Residual grouping.

The residual grouping contains all adjustments that don't fit into one of the other groups.

Recharacterization adjustments.

A recharacterization adjustment will generally result in at least two separate adjustments within the residual grouping.

One adjustment reverses the improper characterization of the PRI.
The other adjustment makes the proper characterization of the PRI.
The adjustments that result from a recharacterization are placed into separate subgroupings.

Step 2—Subgrouping

Determine if any adjustment, within one of the four groupings, needs to be subgrouped. Each adjustment is subgrouped according to how the adjustment would be required to be taken into account separately under section 702(a). If any adjustment could be subject to any preference, limitation, or restriction under the Code (or not allowed, in whole or in part, against ordinary income) if taken into account by any person, the adjustment is placed in a separate subgrouping from all other adjustments within the grouping.

Generally, each separate line item of Schedules K, K-1, K-2, and K-3 or return schedule (that is, Schedule L, etc.) represents a separate and distinct subgrouping.

Example.

Adjustments to ordinary income must be placed in a different subgrouping than capital gain income or interest income because each of those items is required to be separately stated under section 702(a).

Subgroupings generally reflect a line item from Schedules K, K-1, K-2, and K-3 including any subcategories of those lines (for example, alpha codes per the Schedule K-1 instructions or activities broken out via attached statements). If any line item on Schedules K or K-1 or other schedules consists of multiple items and the components are required to be taken into account separately under the Code, regulations, forms, instructions, or other IRS guidance, then such line item must be further subgrouped.

Example.

2019 Schedule K-1, box 13, code A (cash contributions 60%), and box 13, code B (cash contributions 30%), are two separate subgroupings.
The ordinary income (loss) amount reported on Schedule K, line 1, and in box 1 of Schedule K-1 is sourced from Form 1065, page 1, and is a net amount consisting of various page 1 line items of income and expenses. Although those separate page 1 line items are distinct items of income and expense, if they are appropriately netted and included on Schedule K, line 1, and in box 1 of Schedule K-1, the net amount will be considered a single subgrouping, except when such amount is required to be separately allocated, such as when the partnership has more than one trade or business. If the partnership has more than one trade or business activity, the net income (loss) from each separate activity must be reported on Schedule K-1. Each separate activity will constitute a separate subgrouping and it must be determined which activity an adjustment to the page 1 item of income and expense relates to for subgrouping purposes.
If you have a negative adjustment along with a positive adjustment in the same line item of Schedules K and K-1, you must consider whether they may be properly netted at the partnership level and whether they are required to be taken into account separately by any partner. They may be subject to a limitation or preference under the Code before you can place them in the same subgrouping (for example, passive and nonpassive activities).
A negative adjustment that isn't otherwise required to be placed in its own subgrouping must be placed in the same subgrouping as another adjustment if the negative adjustment and the other adjustment would have been properly netted at the partnership level and such netted amount would have been required to be allocated to the partners of the partnership as a single item for purposes of section 702(a) or other provision of the Code and regulations.

Step 3—Netting

Net all adjustments within each of the groupings and subgroupings.

Positive adjustments may be netted with other positive adjustments only if they are in the same grouping. Negative adjustments may be netted with other negative adjustments only if they are in the same grouping.
Positive and negative adjustments may only be netted against each other if they are in the same subgrouping.
An adjustment in one grouping or subgrouping may not be netted against an adjustment in any other grouping or subgrouping.
All adjustments within a subgrouping are netted to determine whether there is a net positive adjustment or net negative adjustment for that subgrouping.
Net positive adjustments from subgroupings or positive adjustments within a grouping (if subgroupings are unnecessary) are netted to determine the net positive adjustment for that grouping. Net negative adjustments from subgroupings within a grouping are netted to determine the net negative adjustment for that grouping.

Step 4—Figure the Total Netted Partnership Adjustments (TNPA)

Each net positive adjustment with respect to a particular grouping or subgrouping in the residual or reallocation grouping that results after netting the adjustments is included in the calculation of the TNPA.
Each net negative adjustment with respect to a residual or reallocation grouping or subgrouping that results after netting the adjustments is excluded from the calculation of the TNPA because those adjustments don't result in an IU.

Note.

If a positive adjustment to an item is reflected in positive adjustments to other items, the positive adjustment of equal or lesser magnitude that is reflected may be treated as zero solely for purposes of calculating any IU.

Step 5—Determine the Highest Tax Rate in Effect Under Section 1 or 11 in the Reviewed Year

Step 6—Determine the Sum of Net Positive Adjustments to Creditable Expenditure and Credit Groupings That Will Increase the Product of the TNPA Multiplied by the Highest Rate in Effect

A net decrease to creditable expenditures is treated as a net positive adjustment and increases the product of the TNPA multiplied by the highest tax rate in effect. A net increase to creditable expenditures is treated as a net negative adjustment (including net negative adjustments resulting from a creditable expenditures reallocation adjustment) that’s excluded from the calculation of the TNPA and is an adjustment that doesn’t result in an IU.
For the credit grouping, a net positive adjustment will increase the product of the TNPA multiplied by the highest tax rate in effect. A net negative adjustment, including net negative adjustments resulting from a credit reallocation adjustment, will be treated as an adjustment that doesn’t result in an IU.

Step 7—Figure the IU Based on the Results of Steps 4 Through 6 and Insert Those Results Into the IU Formula

Figuring the IU

TNPA x rate* =
+ Sum of net positive adjustments to creditable expenditure and credit groupings:
= Total IU
* Highest rate in effect for the reviewed year under section 1 or 11.

Instructions for Form 8082 - Notices

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