The Bipartisan Budget Act of 2015 New Audit Rules for Partnerships (LLC) Form

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The Bipartisan Budget Act of 2015 (“ACT”) made significant changes to the Internal Revenue Service’s (“IRS”) partnership audit rules effective for partnership or limited liability company (taxed as a partnership) tax years beginning in 2018.  See below for information related to the new IRS audit rules.

If you have any questions with respect to the legal implications of these new rules, we strongly encourage you to seek guidance from legal counsel. If you have not already done so, it may be prudent to revisit and update as appropriate your partnership or limited liability company operating agreements to address areas of concern, and if available please forward a copy of the update (amendment) of the agreement to us.
To ensure that Hall, Kistler & Company LLP, has the required documentation in our files to support your decision as to how to apply the new partnership audit rules to your 2018 income tax return, we request that you complete and sign the form below.




Name of Partnership or LLC (taxed as a partnership):
Name of Designated Partnership Representative1:
Are you a small partnership (with 100 or fewer eligible partners*)?
*Important: Each S-Corporation shareholder counts as a partner for purposes of the “100 or fewer eligible partners” rule. Eligible partners are individuals, C-Corporations, S-Corporations, and estates of deceased partners.  If any partners are other partnerships, LLCs or trusts (regardless of whether they are disregarded), then please mark NO.
  ______________YES ____________NO
If you responded YES to the above question, this indicates that your partnership may elect to “opt out” of the new partnership audit rules by making an annual election on a timely filed Form 1065. Please indicate below if you would like our firm to make this “opt out” election on your behalf:
  _____________YES:  I/We do want to “opt out” of the new partnership audit rules.
  _____________NO: I/We do not want to “opt out” of the new partnership audit rules.
By your signature below, you acknowledge and agree that Partnership Name has the ultimate responsibility for decisions related to the application of the new audit rules to your partnership.
Partnership Name 
1 The Partnership Representative under the new rules has a much more expansive role; the Partnership Representative has
the sole and exclusive authority to act on behalf of the partnership and to bind all partners with respect to partnership matters subject to the partnership audit rules.
Categories: February 2019, Monthly Bulletins

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