[Code of Federal Regulations]
[Title 26, Volume 18]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR301.6011-3]

[Page 20-21]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                         Information and Returns
 
Sec. 301.6011-3  Required use of magnetic media for partnership returns.

    (a) Partnership returns required on magnetic media. If a partnership 
with more than 100 partners is required to file a partnership return 
pursuant to Sec. 1.6031(a)-1 of this chapter, the information required 
by the applicable forms and schedules must be filed on magnetic media, 
except as otherwise provided in paragraph (b) of this section. Returns 
filed on magnetic media must be made in accordance with applicable 
revenue procedures or publications. In prescribing revenue procedures or 
publications, the Commissioner may determine that partnerships will be 
required to use any one form of magnetic media filing. For example, the 
Commissioner may determine that partnerships with more than 100 partners 
must file their partnership returns electronically. In filing its 
return, a partnership must register to participate in the magnetic media 
filing program in the manner prescribed by the Internal Revenue Service 
in applicable revenue procedures or publications.
    (b) Waiver. The Commissioner may waive the requirements of this 
section if hardship is shown in a request for waiver filed in accordance 
with this paragraph (b). A determination of hardship will be based upon 
all of the facts and circumstances. One factor in determining hardship 
will be the reasonableness of the incremental cost to the partnership of 
complying with the magnetic media filing requirements. Other factors, 
such as equipment breakdowns or destruction of magnetic media filing 
equipment, also may be considered. A request for waiver must be made in 
accordance with applicable revenue procedures or publications. The 
waiver will specify the type of partnership return and the period to 
which it applies. The waiver will also be subject to such terms and 
conditions regarding the method of filing as may be prescribed by the 
Commissioner.
    (c) Failure to file. If a partnership fails to file a partnership 
return on magnetic media in the manner required and when required to do 
so by this section, the partnership will be deemed to have failed to 
file the return in the manner prescribed for purposes of the information 
return penalty under section 6721. See Sec. 301.6724-1(c)(3) for rules 
regarding the waiver of penalties for undue economic hardship relating 
to filing returns on magnetic media.
    (d) Meaning of terms. The following definitions apply for purposes 
of this section:
    (1) Magnetic media. The term magnetic media means any magnetic media 
permitted under applicable regulations, revenue procedures, or 
publications. These generally include magnetic tape, tape cartridge, and 
diskette, as well as other media (such as electronic filing) 
specifically permitted under the applicable regulations, procedures, or 
publications.
    (2) Partnership. The term partnership means a partnership as defined 
in Sec. 1.761-1(a) of this chapter.
    (3) Partner. The term partner means a member of a partnership as 
defined in section 7701(a)(2).

[[Page 21]]

    (4) Partnership return. The term partnership return means a form in 
Series 1065 (including Form 1065, U.S. Partnership Return of Income, and 
Form 1065-B, U.S. Return of Income for Electing Large Partnerships), 
along with the corresponding Schedules K-1 and all other related forms 
and schedules that are required to be attached to the Series 1065 form.
    (5) Partnerships with more than 100 partners. A partnership has more 
than 100 partners if, over the course of the partnership's taxable year, 
the partnership had more than 100 partners, regardless of whether a 
partner was a partner for the entire year or whether the partnership had 
over 100 partners on any particular day in the year. For purposes of 
this paragraph (d)(5), however, only those persons having a direct 
interest in the partnership must be considered partners for purposes of 
determining the number of partners during the partnership's taxable 
year.
    (e) Examples. The following examples illustrate the provisions of 
paragraph (d)(5) of this section. In the examples, the partnerships 
utilize the calendar year, and the taxable year in question is 2000:

    Example 1. Partnership P had five general partners and 90 limited 
partners on January 1, 2000. On March 15, 2000, 10 more limited partners 
acquired an interest in P. On September 29, 2000, the 10 newest partners 
sold their individual partnership interests to C, a corporation which 
was one of the original 90 limited partners. On December 31, 2000, P had 
the same five general partners and 90 limited partners it had on January 
1, 2000. P had a total of 105 partners over the course of partnership 
taxable year 2000. Therefore, P must file its 2000 partnership return on 
magnetic media.
    Example 2. Partnership Q is a general partnership that had 95 
partners on January 1, 2000. On March 15, 2000, 10 partners sold their 
individual partnership interests to corporation D, which was not 
previously a partner in Q. On September 29, 2000, corporation D sold 
one-half of its partnership interest in equal shares to five 
individuals, who were not previously partners in Q. On December 31, 
2000, Q had a total of 91 partners, and on no date in the year did Q 
have more than 100 partners. Over the course of the year, however, Q had 
101 partners. Therefore, Q must file its 2000 partnership return on 
magnetic media.
    Example 3. Partnership G is a general partnership with 100 partners 
on January 1, 2000. There are no new partners added to G in 2000. One of 
G's partners, A, is a partnership with 53 partners. A is one partner, 
regardless of the number of partners A has. Therefore, G has 100 
partners and is not required to file its 2000 partnership return on 
magnetic media.

    (f) Effective date. In general, this section applies to partnership 
returns for taxable years ending on or after December 31, 2000. However, 
electing large partnerships under section 775 and partnerships using 
foreign addresses on their Series 1065 forms are not required to file 
using magnetic media for taxable years ending before January 1, 2001.

[T.D. 8843, 64 FR 61503, Nov. 12, 1999]

                           Income Tax Returns