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Disregarded Entities and Revocable Trusts Can’t Opt Out of New Partnership Audits

The IRS has rejected requests to allow disregarded entities and revocable trusts to opt out of the new partnership audit regime, but indicated it may revisit the issue.

The new partnership audit regime effective for 2018, permits partnerships with 100 or fewer eligible partners to elect out of the rules. Section 6221(b)(1)(C) defines eligible partners for election out purposes as individuals, C corporations, S corporations, any foreign entity that would be treated as a C corporation if it were a domestic corporation, and the estates of deceased partners.

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If you have any questions or if you would like more information, contact Fred Schutz at (856) 722-5300 ext. 201 or Dave Gill at ext. 210.