[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)(12)-1]

[Page 193]
 
                       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)(12)-1  Special rules relating to spouses.

    (a) Spouses holding a joint interest--(1) In general. Except as 
otherwise provided in this section, spouses holding a joint interest in 
a partnership shall be treated as separate partners for purposes of 
subchapter C of chapter 63 of the Internal Revenue Code. Thus, both 
spouses may participate in administrative and judicial proceedings. The 
term joint interest includes tenancies in common, joint tenancies, 
tenancies by the entirety, and community property.
    (2) Identification of joint interest. For purposes of this section, 
an interest shall be treated as a joint interest in a partnership only 
if both spouses are identified on the partnership return or are 
identified as partners entitled to notice as provided in Sec. 
301.6223(c)-1(b).
    (3) Failure to identify both spouses as partners. If both spouses 
are not identified as set forth in paragraph (a)(2) of this section, 
then the partnership interest shall be treated as separately owned by 
the identified spouse.
    (4) Example. The following example illustrates the application of 
paragraph (a)(3) of this section:

    Example. Wife owns an interest in ABC Partnership and is identified 
on the Schedule K-1 of the partnership return. Wife and Husband live in 
a community property state. The partnership return of ABC partnership 
does not identify Husband, and Husband is not identified as a partner 
entitled to notice as provided in Sec. 301.6223(c)-1(b). Pursuant to 
paragraph (a)(3) of this section, the partnership interest of Wife shall 
be treated as separately owned by Wife.

    (b) Notice and counting rules--(1) In general. Except as provided in 
paragraph (b)(2) of this section, for purposes of applying section 6223 
(relating to notice to partners of proceedings) and section 
6231(a)(1)(B) (relating to the exception for small partnerships), 
spouses holding a joint interest in a partnership shall be treated as 
one partner. Except as provided in paragraph (b)(2) of this section, the 
Internal Revenue Service or the tax matters partner may send any 
required notice to either spouse.
    (2) Identified spouse entitled to notice. For purposes of applying 
section 6223 (relating to notice to partners of proceeding) for a 
partnership taxable year, an individual who holds a joint interest in a 
partnership with a spouse who is entitled to notice under section 6223 
shall be entitled to receive separate notice under section 6223 if such 
individual--
    (i) Is identified as a partner on the partnership return for that 
taxable year; or
    (ii) Is identified as a partner entitled to notice as provided in 
Sec. 301.6223(c)-1(b).
    (c) Conversion of partnership items--(1) In general. If spouses 
holding a joint interest in a partnership are treated as separate 
partners under this section, then section 6231(b) (relating to the 
conversion of partnership items) shall be applied separately to each 
spouse.
    (2) Example. The following example illustrates the application of 
paragraph (c) of this section:

    Example. Husband and Wife own a joint interest in XYZ Partnership. 
The partnership return identifies both spouses on the Schedule K-1. 
Under this section, each spouse is treated as a separate partner. If 
Wife enters into a settlement agreement, Wife's partnership items 
convert to nonpartnership items pursuant to section 6231(b)(1)(C). 
Accordingly, Wife no longer has the right to participate in the 
partnership proceeding subsequent to entering into the settlement 
agreement. Pursuant to paragraph (c) of this section, however, the 
partnership items of Husband are not affected by the conversion of the 
partnership items of Wife, and Husband continues to have the right to 
participate in the partnership proceeding. This result is the same 
regardless of whether the partnership items are reported on a joint 
return or on separate returns.

    (d) Cross-reference. See Sec. 301.6231(a)(2)-1(a) for special rules 
relating to spouses who file joint returns with individuals holding a 
separate interest in a partnership.
    (e) 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)(12)-1T contained in 26 
CFR part 1, revised April 1, 2001.

[T.D. 8965, 66 FR 50559, Oct. 4, 2001]

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