Frequently Asked Questions
Who is eligible for the Section 6226 'Push-Out' Election?
Must be elected within 45 days of the notice of final partnership adjustment; partnership must furnish statements to all reviewed-year partners.
How does the Section 6226 'Push-Out' Election work?
The partnership can elect to 'push out' audit adjustments to the partners who were members during the reviewed year, shifting the tax liability from the partnership entity to the individual partners.
What law authorizes the Section 6226 'Push-Out' Election?
The Section 6226 'Push-Out' Election is authorized under IRC §6226 of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §6226
Source: Internal Revenue Code, Title 26, United States Code
§ 6226. Alternative to payment of imputed underpayment by partnership(a) In generalIf the partnership—(1) not later than 45 days after the date of the notice of final partnership adjustment, elects the application of this section with respect to an imputed underpayment, and
(2) at such time and in such manner as the Secretary may provide, furnishes to each partner of the partnership for the reviewed year and to the Secretary a statement of the partner’s share of any adjustment to a partnership-related item (as determined in the notice of final partnership adjustment),
section 6225 shall not apply with respect to such underpayment (and no assessment of tax, levy, or proceeding in any court for the collection of such underpayment shall be made against such partnership) and each such partner shall take such adjustment into account as provided in subsection (b). The election under paragraph (1) shall be made in such manner as the Secretary may provide and, once made, shall be revocable only with the consent of the Secretary.
(b) Adjustments taken into account by partner(1) Tax imposed in year of statementExcept as provided in paragraph (4), each partner’s tax imposed by chapter 1 for the taxable year which includes the date the statement was furnished under subsection (a) shall be adjusted by the aggregate of the correction amounts determined under paragraph (2) for the taxable years referred to therein.
(2) Correction amountsThe correction amounts determined under this paragraph are—(A) in the case of the taxable year of the partner which includes the end of the reviewed year, the amount by which the tax imposed under chapter 1 would increase or decrease if the partner’s share of the adjustments described in subsection (a) were taken into account for such taxable year, and
(B) in the case of any taxable year after the taxable year referred to in subparagraph (A) and before the taxable year referred to in paragraph (1), the amount by which the tax imposed under chapter 1 would increase or decrease by reason of the adjustment to tax attributes under paragraph (3).
(3) Adjustment of tax attributesAny tax attribute which would have been affected if the adjustments described in subsection (a) were taken into account for the taxable year referred to in paragraph (2)(A) shall—(A) in the case of any taxable year referred to in paragraph (2)(B), be appropriately adjusted for purposes of applying such paragraph, and
(B) in the case of any subsequent taxable year, be appropriately adjusted.
(4) Treatment of partnerships and S corporations in tiered structures(A) In generalIf a partner which receives a statement under subsection (a)(2) is a partnership or an S corporation, such partner shall, with respect to the partner’s share of the adjustment—(i) file with the Secretary a partnership adjustment tracking report which includes such information as the Secretary may require, and
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