Practical - Process for Adjusting Partnership Returns Under Bipartisan Budget Act of 2015 (BBA)

For tax years beginning on or after January 1, 2018, partnerships that do not elect out of the federal centralized partnership audit regime enacted by the Bipartisan Budget Act of 2015 (BBA) cannot amend Forms 1065 or Schedules K-1. Instead, these partnerships must file an Administrative Adjustment Request (AAR). The novel AAR process is exceedingly complex for partnerships, as well as for partners that receive statements showing their allocable share of AAR adjustments. A few states have addressed how partnerships and partners should account for adjustments on a federal AAR, though most have not, adding further complexity to partnership tax compliance. The presenters will explain the process for filing a federal AAR, including situations where the partnership allocates adjustments to their partners, and discuss relevant forms such as the Form 8082, Form 8985, and Form 8986. The presenters will also describe the steps partners need to take if they receive an statement with their allocable share of AAR adjustments. In addition, the presenters will describe how states have addressed state tax filing obligations for partnerships filing federal AARs and their partners.