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.