The Elective Large Partnership Rules

Article by Linda Z. Swartz *

I. INTRODUCTION

A new elective regime was created for large partnerships as part of the Taxpayer Relief Act of 1997 (the "1997 Act"). The new rules dramatically alter the tax treatment of large partnerships that elect to be taxed under the new regime (such partnerships, "ELPs"). The provisions added in Sections¹ 771 through 777 govern the pass-through treatment and reporting requirements of ELPs (the "Reporting Rules"). Sections 6240 through 6255 govern audit procedures and other administrative matters of ELPs (the "Audit Rules"). The ELP Reporting and Audit Rules (together, the "Elective Large Partnership Rules," or the "ELP Rules") apply with respect to partnership tax years beginning after December 31, 1997.²