[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: 26CFR301.6231(a)(1)-1]

[Page 181-182]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 301_PROCEDURE AND ADMINISTRATION--Table of Contents
 
                               Assessment
 
Sec. 301.6231(a)(1)-1  Exception for small partnerships.

    (a) In general. For purposes of the exception for small partnerships 
under section 6231(a)(1)(B), the rules contained in this section shall 
apply.
    (1) 10 or fewer. The 10 or fewer limitation described in section 
6231(a)(1)(B)(i) is applied to the number of natural persons, C 
corporations, and estates of deceased partners that were partners at any 
one time during the partnership taxable year. Thus, for example, a 
partnership that at no time during the taxable year had more than 10 
partners may be treated as a small partnership even if, because of 
transfers of interests in the partnership, 11 or more natural persons, C 
corporations, or estates of deceased partners owned interests in the 
partnership for some portion of the taxable year. See section 1361(a)(2) 
for the definition of a C corporation. For purposes of section 
6231(a)(1)(B) and this section, a husband and wife (and their estates) 
are treated as one person.
    (2) Pass-thru partner. The exception provided in section 
6231(a)(1)(B) does not apply to a partnership for a taxable year if any 
partner in the partnership during that taxable year is a pass-thru 
partner as defined in section 6231(a)(9). For purposes of this paragraph 
(a)(2), an estate shall not be treated as a pass-thru partner.
    (3) Determination made annually. The determination of whether a 
partnership meets the requirements for the exception for small 
partnerships under section 6231(a)(1)(B) and this paragraph (a) shall be 
made with respect to each partnership taxable year. Thus, a partnership 
that does not qualify as a small partnership in one taxable year may 
qualify as a small partnership in another taxable year if the 
requirements

[[Page 182]]

for the exception under section 6231(a)(1)(B) and this paragraph (a) are 
met with respect to that other taxable year.
    (b) Election to have subchapter C of chapter 63 apply--(1) In 
general. Any partnership that meets the requirements set forth in 
section 6231(a)(1)(B) and paragraph (a) of this section (relating to the 
exception for small partnerships) may elect under paragraph (b)(2) of 
this section to have the provisions of subchapter C of chapter 63 of the 
Internal Revenue Code apply with respect to that partnership.
    (2) Method of election. A partnership shall make the election 
described in paragraph (b)(1) of this section by attaching a statement 
to the partnership return for the first taxable year for which the 
election is to be effective. The statement shall be identified as an 
election under section 6231(a)(1)(B)(ii), shall be signed by all persons 
who were partners of that partnership at any time during the partnership 
taxable year to which the return relates, and shall be filed at the time 
(determined with regard to any extension of time for filing) and place 
prescribed for filing the partnership return. However, for any 
partnership taxable year for which the due date of the return 
(determined without regard to extensions) is before January 2, 2002, the 
partnership may file the statement described in the preceding sentence 
on or before the date which is one year before the date specified in 
section 6229(a) for the expiration of the period of limitations with 
respect to that partnership (determined with regard to extensions of 
that period under section 6229(b)).
    (3) Years covered by election. The election shall be effective for 
the partnership taxable year to which the return relates and all 
subsequent partnership taxable years unless revoked with the consent of 
the Commissioner.
    (c) Effective date. This section is applicable to partnership 
taxable years beginning on or after October 4, 2001. For years beginning 
prior to October 4, 2001, see Sec. 301.6231(a)(1)-1T contained in 26 
CFR part 1, revised April 1, 2001.

[T.D. 8965, 66 FR 50556, Oct. 4, 2001]