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ARTICLE · 17 MARCH 2021

Partnerships Given Penalty Relief

Winston Taylor
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On January 19, 2021, the IRS issued Notice 2021-13, which provides partnerships with relief from some penalties for the inclusion of incorrect information in reporting their partners' beginning capital-account balances and ...

United StatesTax
Richard A. Nessler
Richard A. Nessler

On January 19, 2021, the IRS issued Notice 2021-13, which provides partnerships with relief from some penalties for the inclusion of incorrect information in reporting their partners' beginning capital-account balances and relief from accuracy-related penalties under §§ 6698,1 6721,2 and 67223 attributable to incorrect information reported for the 2020 tax year.

Analysis

Pursuant to § 6031 and the accompanying Treasury Regulations, the IRS has, in forms and instructions, long required the reporting of partner capital-account balances.

Beginning with the 2020 tax year, partnerships could report their partners' capital accounts using one of a variety of methods that are based on different principles (for example, tax basis, generally accepted accounting principles (GAAP), § 704(b) book, or any other method).

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