[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)(2)-1]

[Page 182-183]
 
                       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)(2)-1  Persons whose tax liability is determined indirectly 
by partnership items.

    (a) Spouse filing joint return with individual holding a separate 
interest--(1) In general. Except as otherwise provided in this paragraph 
(a), a spouse who files a joint return with an individual holding a 
separate interest in the partnership shall be treated as a partner for 
purposes of subchapter C of chapter 63 of the Internal Revenue Code. 
Thus, the spouse who files a joint return with a partner will be 
permitted to participate in administrative and judicial proceedings.
    (2) Counting rules. A spouse who files a joint return with an 
individual holding a separate interest in the partnership shall not be 
counted as a partner for purposes of applying section 6223(b) (relating 
to special rules for partnerships with more than 100 partners) and 
section 6231(a)(1)(B) (relating to the exception for small 
partnerships).
    (3) Notice rules--(i) In general. Except as provided in paragraph 
(a)(3)(ii) of this section, for purposes of subchapter C of chapter 63 
of the Internal Revenue Code, a spouse who files a joint return with an 
individual holding a separate interest in the partnership shall be 
treated as receiving any notice received by the individual holding the 
separate interest.
    (ii) Spouse identified on partnership return or by statement. 
Paragraph (a)(3)(i) of this section shall not apply to a spouse who 
files a joint return with an individual holding a separate interest in 
the partnership if that spouse--
    (A) Is identified on the partnership return; or
    (B) Is identified as a partner entitled to notice as provided in 
Sec. 301.6223(c)-1(b).
    (4) Conversion of partnership items--(i) Individual holding a 
separate interest. A spouse who files a joint return with an individual 
holding a separate interest in the partnership shall cease to be treated 
as a partner in the partnership under paragraph (a)(1) of this section 
upon the conversion of the partnership items of the individual holding 
the separate interest in the partnership to nonpartnership items 
pursuant to section 6231(b). If each spouse holds a separate interest in 
the partnership, the

[[Page 183]]

previous sentence shall be applied separately with respect to each 
partnership interest.
    (ii) Spouse who files a joint return with an individual holding a 
separate interest in the partnership. A spouse who files a joint return 
with an individual holding a separate interest in the partnership shall 
cease to be treated as a partner in the partnership under paragraph 
(a)(1) of this section upon the occurrence of an event that would 
convert the partnership items of the spouse to nonpartnership items if 
the spouse were the owner of a separate interest.
    (iii) Examples. The following examples illustrate the application of 
paragraph (a)(4) of this section:

    Example 1. Husband owns a separate interest in ABC partnership and 
files a joint return with Wife. Husband files for bankruptcy. Pursuant 
to Sec. 301.6231(c)-7, upon filing for bankruptcy, the partnership 
items of the debtor convert to nonpartnership items. Thus, Husband's 
partnership items converted to nonpartnership items upon the filing of 
Husband's bankruptcy petition. Pursuant to paragraph (a)(4)(i) of this 
section, Wife is no longer treated as a partner of ABC partnership as of 
the date the partnership items of Husband converted to nonpartnership 
items.
    Example 2. Wife owns a separate interest in XYZ partnership and 
files a joint return with Husband. Husband files for bankruptcy. Because 
the filing of the bankruptcy petition by Husband is an event that would 
convert Husband's partnership items to nonpartnership items if Husband 
were the owner of a separate interest, Husband shall no longer be 
treated as a partner as of the filing of the bankruptcy petition. 
Pursuant to paragraph (a)(4)(ii) of this section, the partnership items 
of Wife are not affected by Husband's bankruptcy.

    (5) Cross-reference. See Sec. 301.6231(a)(12)-1 for special rules 
relating to spouses holding a joint interest in a partnership.
    (b) Shareholder of C corporation. A shareholder of a C corporation 
(as defined in section 1361(a)(2)) is not a partner in a partnership 
merely because the C corporation is a partner in that partnership.
    (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)(2)-1T contained in 26 
CFR part 1, revised April 1, 2001.

[T.D. 8965, 66 FR 50557, Oct. 4, 2001]