[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)(6)-1]

[Page 186-187]
 
                       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)(6)-1  Computational adjustments.

    (a) Changes in a partner's tax liability--(1) In general. A change 
in the tax liability of a partner to properly reflect the treatment of a 
partnership item under subchapter C of chapter 63 of the Internal 
Revenue Code is made through a computational adjustment. A computational 
adjustment includes a change in tax liability that reflects a change in 
an affected item where that change is necessary to properly reflect the 
treatment of a partnership item, or any penalty, addition to tax, or 
additional amount that relates to an adjustment to a partnership item. 
However, if a change in a partner's tax liability cannot be made without 
making one or more partner-level determinations, that portion of the 
change in tax liability attributable to the partner-level determinations 
shall be made under the deficiency procedures (as described in 
subchapter B of chapter 63 of the Internal Revenue Code), except for any 
penalty, addition to tax, or additional amount that relates to an 
adjustment to a partnership item.
    (2) Affected items that do not require partner-level determinations. 
Changes in a partner's tax liability with respect to affected items that 
do not require partner-level determinations (such as the threshold 
amount of medical deductions under section 213 that changes as the 
result of determinations made at the partnership level) are 
computational adjustments that are directly assessed. When making 
computational adjustments, the Internal Revenue Service may assume that 
amounts the partner reported on the partner's individual return include 
all amounts reported to the partner by the partnership (on the Schedule 
K-1s attached to the partnership's original return), absent contrary 
notice to the Internal Revenue Service (for example, a ``Notice of 
Inconsistent Treatment'' pursuant to Sec. 301.6222(a)-2(c)). Such an 
assumption by the Internal Revenue Service does not constitute a 
partner-level determination. Moreover, substituting redetermined 
partnership

[[Page 187]]

items for the partner's previously reported partnership items (including 
partnership items included in carryover amounts) does not constitute a 
partner-level determination where the Internal Revenue Service otherwise 
accepts, for the sole purpose of determining the computational 
adjustment, all nonpartnership items (including, for example, 
nonpartnership item components of carryover amounts) as reported.
    (3) Affected items that require partner-level determinations. 
Changes in a partner's tax liability with respect to affected items that 
require partner-level determinations (such as a partner's at-risk amount 
to the extent it depends upon the source from which the partner obtained 
the funds that the partner contributed to the partnership) are 
computational adjustments that are subject to the deficiency procedures. 
Notwithstanding the preceding sentence, any penalty, addition to tax, or 
additional amount that relates to an adjustment to a partnership item is 
not subject to the deficiency procedures, but rather may be directly 
assessed as part of the computational adjustment that is made following 
the partnership proceeding, based on determinations in that proceeding, 
regardless of whether any partner-level determinations may be required.
    (b) Interest. A computational adjustment includes any interest due 
with respect to any underpayment or overpayment of tax attributable to 
adjustments to reflect properly the treatment of partnership items.
    (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)(6)-1T contained in 26 
CFR part 1, revised April 1, 2001.

[T.D. 8965, 66 FR 50558, Oct. 4, 2001]