§ 6242. Procedures for taking partnership adjustments into account
(a)
Adjustments flow through to partners for year in which adjustment takes effect
(1)
In general
If any partnership adjustment with respect to any partnership item takes effect (within the meaning of subsection (d)(2)) during any partnership taxable year and if an election under paragraph (2) does not apply to such adjustment, such adjustment shall be taken into account in determining the amount of such item for the partnership taxable year in which such adjustment takes effect. In applying this title to any person who is (directly or indirectly) a partner in such partnership during such partnership taxable year, such adjustment shall be treated as an item actually arising during such taxable year.
(2)
Partnership liable in certain cases
If—
(A)
a partnership elects under this paragraph to not take an adjustment into account under paragraph (1),
(B)
a partnership does not make such an election but in filing its return for any partnership taxable year fails to take fully into account any partnership adjustment as required under paragraph (1), or
(C)
any partnership adjustment involves a reduction in a credit which exceeds the amount of such credit determined for the partnership taxable year in which the adjustment takes effect,
the partnership shall pay to the Secretary an amount determined by applying the rules of subsection (b)(4) to the adjustments not so taken into account and any excess referred to in subparagraph (C).
(3)
Offsetting adjustments taken into account
If a partnership adjustment requires another adjustment in a taxable year after the adjusted year and before the partnership taxable year in which such partnership adjustment takes effect, such other adjustment shall be taken into account under this subsection for the partnership taxable year in which such partnership adjustment takes effect.
(b)
Partnership liable for interest and penalties
(1)
In general
If a partnership adjustment takes effect during any partnership taxable year and such adjustment results in an imputed underpayment for the adjusted year, the partnership—
(2)
Determination of amount of interest
The interest computed under this paragraph with respect to any partnership adjustment is the interest which would be determined under chapter 67—
(B)
for the period beginning on the day after the return due date for the adjusted year and ending on the return due date for the partnership taxable year in which such adjustment takes effect (or, if earlier, in the case of any adjustment to which subsection (a)(2) applies, the date on which the payment under subsection (a)(2) is made).
Proper adjustments in the amount determined under the preceding sentence shall be made for adjustments required for partnership taxable years after the adjusted year and before the year in which the partnership adjustment takes effect by reason of such partnership adjustment.
(3)
Penalties
A partnership shall be liable for any penalty, addition to tax, or additional amount for which it would have been liable if such partnership had been an individual subject to tax under chapter 1 for the adjusted year and the imputed underpayment determined under paragraph (4) were an actual underpayment (or understatement) for such year.
(4)
Imputed underpayment
For purposes of this subsection, the imputed underpayment determined under this paragraph with respect to any partnership adjustment is the underpayment (if any) which would result—
(A)
by netting all adjustments to items of income, gain, loss, or deduction and by treating any net increase in income as an underpayment equal to the amount of such net increase multiplied by the highest rate of tax in effect under section
1 or
11 for the adjusted year, and
(B)
by taking adjustments to credits into account as increases or decreases (whichever is appropriate) in the amount of tax.
For purposes of the preceding sentence, any net decrease in a loss shall be treated as an increase in income and a similar rule shall apply to a net increase in a loss.
(c)
Administrative provisions
(1)
In general
Any payment required by subsection (a)(2) or (b)(1)(A)—
(2)
Interest
For purposes of determining interest, any payment required by subsection (a)(2) or (b)(1)(A) shall be treated as an underpayment of tax.
(3)
Penalties
(A)
In general
In the case of any failure by any partnership to pay on the date prescribed therefor any amount required by subsection (a)(2) or (b)(1)(A), there is hereby imposed on such partnership a penalty of 10 percent of the underpayment. For purposes of the preceding sentence, the term “underpayment” means the excess of any payment required under this section over the amount (if any) paid on or before the date prescribed therefor.
(d)
Definitions and special rules
For purposes of this section—
(1)
Partnership adjustment
The term “partnership adjustment” means any adjustment in the amount of any partnership item of an electing large partnership.
(2)
When adjustment takes effect
A partnership adjustment takes effect—
(A)
in the case of an adjustment pursuant to the decision of a court in a proceeding brought under part II, when such decision becomes final,
(B)
in the case of an adjustment pursuant to any administrative adjustment request under section
6251, when such adjustment is allowed by the Secretary, or
(3)
Adjusted year
The term “adjusted year” means the partnership taxable year to which the item being adjusted relates.
(e)
Payments nondeductible
No deduction shall be allowed under subtitle A for any payment required to be made by an electing large partnership under this section.