Certain BBA partnerships can file amended 2018, 2019, and 2020 returns

| 7/15/2021
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The IRS released Revenue Procedure 2021-29 to allow certain partnerships subject to the partnership audit regime enacted by the Bipartisan Budget Act of 2015 (BBA) to adjust previously filed partnership returns by filing an amended Form 1065, “U.S. Return of Partnership Income,” and Schedule K-1s, “Partner’s Share of Income, Deductions, Credits, Etc.,” rather than having to file an administrative adjustment request (AAR). This relief means that partners in eligible BBA partnerships that file amended returns don’t have to wait until they file their 2021 tax returns to get additional 2018, 2019, and 2020 depreciation allowed under Section 202 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (TCDTRA), which was enacted as part of the Consolidated Appropriations Act of 2021. Section 202 of the TCDTRA retroactively allows a 30-year recovery period for residential rental property placed in service before Jan. 1, 2018, that is held by an electing real property trade or business as defined in IRC Section 163(j)(7)(B) and that is not previously subject to the alternative depreciation system. Specific guidance regarding implementation of Section 202 of the TCDTRA is in Revenue Procedure 2021-28.

Only BBA partnerships that filed Form 1065 and furnished Schedule K-1s for partnership taxable years beginning in 2018, 2019, or 2020 prior to June 17, 2021, are eligible to file amended partnership returns and amended Schedule K-1s under the revenue procedure. Eligible BBA partnerships have until Oct. 15, 2021, to file amended returns under this revenue procedure.

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To file amended returns under the revenue procedure, a BBA partnership should file a Form 1065 with the “Amended Return” box checked, furnish corresponding amended Schedule K-1s, write “FILED PURSUANT TO REV PROC 2021-29” at the top of the amended return, and attach a statement with each Schedule K-1 sent to its partners with the same notation. The amended returns (including the Schedule K-1s) may be filed electronically or on paper.

This relief is focused on easing access to retroactive tax benefits for electing real property trades or businesses under Section 202 of the TCDTRA. BBA partnerships using this relief can amend any item on the return, not just those affected by claiming tax relief under Section 202 of the TCDTRA. However, unlike earlier BBA partnership amended return relief under Revenue Procedure 2020-23 for the Coronavirus Aid, Relief, and Economic Security Act, relief to file amended returns under Revenue Procedure 2021-29 is available only if depreciation benefits under Section 202 of the TCDTRA are claimed on the amended partnership return. BBA partnerships under examination, as well as those that already have filed AARs for 2018, 2019, or 2020, are eligible to file an amended Form 1065 and Schedule K-1s under the revenue procedure.

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Rochelle Hodes
Rochelle Hodes
Principal, Washington National Tax