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Department of the Treasury
Internal Revenue Service
Instructions for Form 8082

(Rev. January 2023)

For use with Form 8082 (Rev. December 2018)
Notice of Inconsistent Treatment or
Administrative Adjustment Request (AAR)

Section references are to the Internal Revenue Code unless expenses for the claim year. This may be done using Form
otherwise noted. 6765, Credit for Increasing Research Activities.
Contents Page As part of the AAR process, the BBA partnership will also
Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 submit Forms 8985 and 8986 to the IRS and send Forms 8986
General Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 1 to its partners. The BBA partnership is not required to provide
the five items of information again on the Forms 8985 and 8986.
Purpose of Form . . . . . . . . . . . . . . . . . . . . . . . . . 1 The BBA partners do not need to attach the five items of
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 information to their original returns to which their Forms 8986 are
Who Must File . . . . . . . . . . . . . . . . . . . . . . . . . . 3 attached. For more information, see Research Credit Claims
How and When To File . . . . . . . . . . . . . . . . . . . . 4 (Section 41) on Amended Returns Frequently Asked Questions
at IRS.gov/businesses/corporations/research-credit-claims-
Specific Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 6 section-41FAQ.
Part I—General Information . . . . . . . . . . . . . . . . . 6
Part II—Inconsistent or Administrative General Instructions
Adjustment Request (AAR) Items . . . . . . . . . . . 8 Unless otherwise noted, references to sections 6221 through
6241 are to Internal Revenue Code sections as amended by
Part III—Explanations . . . . . . . . . . . . . . . . . . . . 10
BBA.
Future Developments
Purpose of Form
For the latest information about developments related to Form
8082 and its instructions, such as legislation enacted after they Notice of inconsistent treatment. If you are a partner in a
were published, go to IRS.gov/Form8082. TEFRA or BBA partnership, S corporation shareholder,
beneficiary of an estate or trust, owner of a foreign trust, or
Reminders residual interest holder in a real estate mortgage investment
conduit (REMIC), you must generally report items consistent
Bipartisan Budget Act of 2015 (BBA). BBA created a new with the way they were reported to you on Schedule K-1,
centralized partnership audit regime generally effective for Schedule K-3, Schedule Q, and/or a foreign trust statement.
partnership tax years beginning after 2017. The Tax Equity and However, there may be reasons why you wish to report these
Fiscal Responsibility Act of 1982 (TEFRA) generally applied to items differently. Use Form 8082 for this purpose.
tax years beginning before 2018. BBA repealed TEFRA and the
electing large partnership (ELP) rules. Consequently, former Use Form 8082 to notify the IRS of any inconsistency
ELPs are now treated as other partnerships under the BBA between your tax treatment of an item and the way the
regime. pass-through entity treated and reported the same item on its
Election into BBA for tax years beginning before 2018. return. Also use the form to notify the IRS if you did not receive
Certain partnerships may elect to have the new centralized Schedule K-1, Schedule Q, and/or a foreign trust statement from
partnership audit regime apply to a return filed for an eligible tax the foreign trust by the due date for filing your return (including
year when filing an Administrative Adjustment Request (AAR). extensions). Additionally, based upon the instructions for
See AAR With Election Into the Centralized Partnership Audit Schedule K-2, if the pass-through entity was required to provide
Regime Under BBA, later, for information on how to make the a Schedule K-3 but did not, use Form 8082 to notify the IRS of
election. An election can also be made upon notification of an this. However, for tax years beginning before 2018, don’t file
audit. See Regulations section 301.9100-22 for additional Form 8082 as a partner in an ELP. Instead, you must report all
details. partnership items in a manner consistent with the way the
partnership reported them on Schedule K-1 (Form 1065-B),
Increased research credit reported by a BBA Partner's Share of Income (Loss) From an Electing Large
partnership. If an increased research credit is reported by a Partnership.
BBA partnership, the BBA partnership does not file an amended
return. Instead, the BBA partnership must file an AAR and attach AAR under TEFRA. Form 8082 is also used if you are filing an
the following five items of information to that AAR. AAR electronically to correct a previously e-filed Form 1065,
1. Identify all the business components to which the section U.S. Return of Partnership Income. An AAR is:
41 research credit relates for that tax year. • A request by the tax matters partner (TMP) to correct items on
the original partnership return;
2. For each business component, identify all research • A request by a TEFRA partner (other than a partner in an
activities performed. ELP), or residual interest holder, to correct pass-through items
3. Name the individuals who performed each research on that person's income tax return; or
activity. • A request by an ELP to correct items on the original TEFRA
4. The information each individual sought to discover. partnership return.
5. The total qualified employee wage expenses, total Protective TEFRA AARs. Generally, a protective AAR is a
qualified supply expenses, and total qualified contract research request for credit or refund based on current litigation or
expected changes in tax law or other legislation. The TMP or

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partner with authority (PWA) files a protective AAR when the (REMIC) Income Tax Return, for tax years beginning before
right to a refund is contingent on future events and may not be 2018.
determinable until after the period for filing an AAR has expired. For a limited liability company (LLC), a member of the LLC is
Protective AARs are subject to AAR statutes set forth in sections treated as a partner and a member-manager is treated as a
6227, 6228, and 6229 (prior to amendment by BBA). general partner. A member-manager is any owner of an interest
If you are a TMP filing on behalf of the partnership, the in the LLC who, alone or together with others, has continuing
petition period described in section 6228 (prior to amendment by exclusive authority to make management decisions necessary to
BBA) can be extended by using Form 9248, Agreement to conduct the business for which the LLC was formed. If there are
Extend the Time to File a Petition for Adjustment by the Tax no elected or designated member-managers, each owner is
Matters Partner With Respect to Partnership Items. A protective treated as a member-manager. For details, see Regulations
AAR must clearly state that it is a protective AAR, alert the IRS to section 301.6231(a)(7)-2.
the essential nature of the adjustment, and specify the line item
Partner with authority (PWA). Each ELP must designate a
to be protected.
partner (or other person) as the PWA who shall have the sole
AAR under BBA. Use Form 8082 if the partnership authority to act on behalf of the partnership. See section 6255(b)
representative (PR) (on behalf of the partnership) is filing an (1) (prior to amendment by BBA). If the partnership fails to
AAR electronically to adjust a previously e-filed Form 1065. Also designate a PWA, the IRS can select any partner to serve as the
refer to the Instructions for Form 1065. partner with such authority. The PWA has the authority to file an
BBA created a new centralized partnership audit regime AAR on behalf of the partnership. The PWA does this by filing
generally effective for partnership tax years beginning after Form 8082.
2017, replacing the consolidated audit proceedings under BBA partnership. A partnership subject to the centralized
sections 6221 through 6234 enacted by TEFRA. All partnerships partnership audit regime is a BBA partnership. All partnerships
with tax years beginning after 2017 are subject to the centralized with tax years beginning after 2017 are BBA partnerships unless
partnership audit regime unless they make a valid election under they make a valid election out of the centralized partnership
section 6221(b). See section 6221(b) and the Instructions for audit regime. A partner in a BBA partnership is referred to as a
Form 1065 for information on which partnerships are eligible to “BBA partner.” An AAR filed by a BBA partnership is referred to
make this election. as a “BBA AAR” and must be filed by the PR.
For purposes of these instructions (unless otherwise noted), Partnership representative (PR). If the partnership is subject
the centralized partnership audit regime proceedings under to the centralized partnership audit regime, section 6223
sections 6221 through 6241 will be referred to as “BBA provides that the partnership must designate a partner or other
proceedings.” person with a substantial presence in the United States as the
PR who shall have the sole authority to act on behalf of the
Definitions partnership. If the designated PR is an entity, the partnership
TEFRA partnership. The consolidated audit proceedings of must also appoint a designated individual to act on behalf of the
sections 6221 through 6234 (prior to amendment by BBA) are entity PR. The partnership and all partners are bound by the
referred to as “TEFRA proceedings”; partnerships that are actions of the PR in dealings with the IRS under BBA.
subject to TEFRA proceedings are referred to as “TEFRA NonBBA partnership. Under BBA, certain partnerships with
partnerships.” An AAR filed by the TMP of the TEFRA 100 or fewer eligible partners for the tax year can elect out of the
partnership is a TEFRA AAR. Any partner in a TEFRA centralized partnership audit regime. Additional details regarding
partnership may file an AAR using Form 8082. TEFRA the election out of the centralized partnership audit regime can
proceedings will not apply to partnerships with tax years be found in the Instructions for Form 1065. A partnership that
beginning after 2017. A partnership with a tax year beginning elects out of the centralized partnership audit regime is referred
before 2018 that is not subject to TEFRA proceedings is referred to as a “nonBBA partnership.”
to as a “nonTEFRA partnership.”
Partnership-related items (PRIs). For BBA partnerships,
Pass-through entity. A partnership (including an ELP), S under section 6241(2)(B), a PRI is any item or amount with
corporation, estate, trust, or REMIC. respect to the partnership that is relevant in determining the
Item. Any item of a partnership, S corporation, estate, trust, or income tax liability of any person, without regard to whether the
REMIC required to be taken into account for the pass-through item or amount appears on the partnership's return. This
entity's tax year by the partners, shareholders, beneficiaries, includes an imputed underpayment (IU) and an item or amount
owners, or residual interest holders of that pass-through entity. relating to any transaction with, basis in, or liability of the
partnership.
Tax matters partner (TMP). If the partnership is subject to the
TEFRA procedures, it can designate a partner as the TMP for Adjustment year. For BBA partnerships, the partnership tax
the tax year for which the return is filed. The TMP is a general year in which:
partner (in most cases, the TMP must also be a U.S. person) • In the case of an adjustment pursuant to the decision of a
designated by the partnership to represent the partners in the court in a proceeding brought under section 6234, such decision
consolidated audit and litigation proceedings under sections becomes final;
6221 through 6234 (“TEFRA proceedings”). The designation is • In the case of an AAR under section 6227, such AAR is filed;
made by completing the Designation of Tax Matters Partner or
section on Form 1065 used for tax years beginning before 2018. • In any other case, a notice of final partnership adjustment is
Additionally, a REMIC may designate a TMP in the same mailed under section 6231 or, if the partnership waives the
manner in which a partnership may designate a TMP under restrictions under section 6232(b) (regarding limitations on
Regulations section 301.6231(a)(7)-1. When applying that assessments), the waiver is executed by the IRS.
section, treat all holders of a residual interest in the REMIC as Reviewed year. For BBA partnerships, the partnership’s tax
general partners. The designation may be made by completing year to which a partnership adjustment relates.
the Designation of Tax Matters Person section on page 3 of
Form 1066, U.S. Real Estate Mortgage Investment Conduit Reviewed year pass-through partner. For purposes of these
instructions, under BBA, a reviewed year pass-through partner is

-2- Instructions for Form 8082 (Rev. Jan. 2023)

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a pass-through entity that held an interest in a BBA partnership        you are required to file your tax return (including extensions), 
at any time during the reviewed year, which is the partnership tax      and there are items you must include on your return.
year to which the partnership adjustment relates. For example, if       • If the pass-through entity did not provide you Schedule K-3, 
the BBA AAR is filed to make an adjustment to income for the            and it was required to do so according to the instructions for 
2020 tax year, 2020 is the reviewed year.                               Schedule K-2, use Form 8082 to notify the IRS of this.
Schedule K-1.    An annual schedule reporting the partner's,                    If you don't notify the IRS that you are reporting an item 
shareholder's, or beneficiary's share of income, deductions,              !     (Part I, line 1, box a) inconsistently, any deficiency 
credits, etc., from a partnership, S corporation, estate, or            CAUTION (including any late filing or late payment penalties 
domestic trust.                                                         applicable to the deficiency) that results from an adjustment to 
                                                                        make your amount or other treatment of the item consistent with 
Schedule K-2.    An extension of Schedule K of Form 1065 used 
                                                                        the amount or treatment of the item on the pass-through entity's 
to report items of international tax relevance from the operation 
                                                                        return may be assessed immediately. An inconsistent item can 
of a partnership.
                                                                        exist on either your original or amended return.
Schedule K-3.    An extension of Schedule K-1 of Form 1065 
generally used to report to partners their share of the items           AAR under TEFRA.      File Form 8082 if any of the following 
reported on Schedule K-2.                                               apply.
Schedule Q.    A quarterly schedule reporting the residual              • You are requesting an administrative adjustment to correct a 
                                                                        previously filed partnership return for a TEFRA partnership. S 
interest holder's share of taxable income or net loss from the          corporations, estates, and trusts cannot file an AAR (see Who 
REMIC.                                                                  May Not File, later, for details).
Form 8985, Pass-Through Statement—Transmittal/Partner-                  • You are a partner in a TEFRA partnership (other than a 
ship Adjustment Tracking Report.      Form 8985 is used to              partner in an ELP) or residual interest holder in a REMIC 
summarize and transmit Forms 8986, Partner's Share of                   requesting an administrative adjustment to correct pass-through 
Adjustment(s) to Partnership-Related Item(s), (by an audited            items on your income tax return.
partnership, a partnership filing an AAR, or pass-through               AAR under BBA.        File Form 8082 if you are the PR or 
partner) in situations where the partners are taking into account       designated individual requesting an administrative adjustment to 
the adjustments. Form 8985 is also used to report payments              correct a previously filed partnership return on behalf of the BBA 
made and related calculations by a pass-through partner, if             partnership.
applicable. See the instructions for these forms for further 
information.                                                                    When a partnership’s federal return is changed for any 
                                                                        TIP     reason, it may affect its state return. For more 
Form 8986, Partner’s Share of Adjustment(s) to Partner-                         information, contact the state tax agency with which the 
ship-Related Item(s).  Form 8986 was created for partnerships           state return is filed.
to show each partner’s share of adjustments to PRI as a result of 
a BBA audit or BBA AAR for situations where the partners are 
taking into account the adjustments.                                    Who May Not File
Foreign trust statement.    Any of the following annual                 Don't use Form 8082 to file a Notice of Inconsistent Treatment or 
statements furnished by a foreign trust to its owners or                an AAR if any of the following apply.
beneficiaries.                                                          • If you are a REMIC and want to correct items on the original 
• Foreign Grantor Trust Owner Statement.                                REMIC return. Instead, file Form 1065-X.
• Foreign Grantor Trust Beneficiary Statement.                          • For any amount of loss, deduction, or credit from 
• Foreign Nongrantor Trust Beneficiary Statement.                       Schedule K-1, Schedule K-3, Schedule Q, Form 8986, or the 
                                                                        foreign trust statement that you don't report on your return 
Who Must File                                                           because the amount is otherwise limited by law (such as a loss 
                                                                        limited by the at-risk or passive activity rules).
Notice of inconsistent treatment.    Generally, file Form 8082 if       • If you are a partner, and all five of the following elements 
any of the following apply.                                             apply.
• You believe an item wasn’t properly reported on the                     ° The tax year of the partnership began prior to January 1, 
                                                                         
Schedule K-1 or Schedule K-3 you received from the                        2018.
partnership, or on a Form 8986 received from an AAR                       ° The partnership didn’t make an early election into BBA.
                                                                         
partnership (but not an audited partnership), S corporation,              ° Your partnership had no more than 10 partners at any one 
                                                                         
estate, or domestic trust; the Schedule Q you received from the           time during the tax year. A husband and wife (and their 
REMIC; or the foreign trust statement you received from the               estates) are treated as one partner.
foreign trust.                                                            ° Each partner was either an individual (other than a 
                                                                         
• You believe an item shown on your schedule or statement is              nonresident alien) or an estate of a deceased partner, or a C 
incorrect but it is not an item that otherwise has to be reported on      corporation.
your tax return. For example, if you believe that the percentage          ° The partnership didn’t have an election in effect under 
                                                                         
shown as your ownership of capital at the end of the year wasn’t          section 6231(a)(1)(B)(ii) (prior to amendment by BBA) for 
properly reflected on Schedule K-1, file Form 8082 to report this,        the tax year to have the TEFRA consolidated audit rules 
even though you aren’t otherwise required to report that                  apply.
percentage on your tax return. If you discover this kind of 
inconsistency after filing your original return, file an amended        • If you are a BBA partnership, you may not file an AAR solely 
return to report it. In the space provided on the amended return        for the purpose of changing the PR. See the Instructions for 
for writing explanations, enter “See attached Form 8082.” If the        Form 8979, Partnership Representative Revocation, 
correction doesn’t affect your tax return, no amounts need to be        Designation, and Resignation, for more information.
entered on the amended return if the Form 8082 item is the only         • You may not file a BBA AAR after the prescribed time to do so 
reason for filing the amended return.                                   (see How and When To File, later).
• The pass-through entity hasn’t filed a tax return or given you a      • If you are a BBA partnership that has received a notice of 
Schedule K-1, Schedule Q, or foreign trust statement by the time        administrative proceeding, you may not file an AAR.

Instructions for Form 8082 (Rev. Jan. 2023)                          -3-

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• If you are a partner and the BBA partnership in which you are            • The interest figured with respect to any IU is the interest that 
an investor has received a notice of administrative proceeding, a          would be determined under chapter 67 for the period beginning 
Form 8082 with respect to inconsistent treatment of partnership            on the day after the return due date for the reviewed year and 
items from that BBA partnership cannot be filed.                           ending on the return due date for the adjustment year as defined 
• A partner may not file an AAR on behalf of the BBA                       under section 6225(d)(2) or, if earlier, the date the IU is paid.
partnership in which it is a partner unless doing so is in its             • Any penalty, addition to tax, or additional amount that is 
capacity as the PR for that partnership.                                   determined at the partnership level is applied as if that BBA 
• If you are a shareholder in an S corporation, except as a                partnership had been an individual subject to tax under 
notice of inconsistent treatment when the shareholder's return is          chapter 1 for the reviewed year and the IU were an actual 
not consistent with the return of the S corporation. Form 8082             underpayment (or understatement) for that year for purposes of 
cannot be filed by a shareholder to request an administrative              Part II of subchapter A of chapter 68.
adjustment to his or her tax return to correct S corporation items. 
                                                                           Election to apply the alternative to payment of the IU.        If the 
Instead, the shareholder must file an amended income tax 
                                                                           partners must take into account the adjustments because the 
return.
                                                                           BBA partnership filed an AAR and there are adjustments that 
• If you are a beneficiary of an estate or domestic trust, or a 
                                                                           don't result in an IU or if a BBA partnership elects the alternative 
beneficiary or an owner of a foreign trust, except as a notice of 
                                                                           to payment of the IU under sections 6227(b)(2) and 6226(c), 
inconsistent treatment when the beneficiary's or owner's return is 
                                                                           interest shall be determined:
not consistent with the return of the estate or trust. Form 8082 
cannot be filed by a beneficiary or owner to request an                    • At the partner level;
administrative adjustment to his or her tax return to correct              • From the due date of the return for the tax year to which the 
                                                                           increase is attributable, determined by taking into account any 
estate or trust items. Instead, the beneficiary or owner must file 
                                                                           increases attributable to a change in tax attributes for a tax year 
an amended income tax return.
                                                                           under section 6226(b)(2) until the date of payment; and
• If you are a residual interest holder, and all of the following 
apply.                                                                     • At the section 6621(a)(2) underpayment rate.

  ° Your REMIC had no more than one residual interest holder               How Many Forms To Complete
  at any one time during the tax year.                                     You must complete and file a separate form for each 
  ° If at any time during the tax year the REMIC had more than             pass-through entity for which you are reporting an inconsistent 
  one residual interest holder, each residual interest holder              or AAR item. If you are reporting more than four inconsistent or 
  was either an individual (other than a nonresident alien), an            AAR items from one pass-through entity, use additional Forms 
  estate, or a C corporation.                                              8082.
  ° The REMIC didn’t have an election in effect under section 
  6231(a)(1)(B)(ii) (prior to amendment by BBA) for the tax                How and When To File
  year to have the consolidated audit rules apply.
                                                                           Do not file Form 8082 by itself.
• If you are a partner in an ELP for tax years before 2018.                  If you file Form 8082 as a notice of inconsistent treatment, 
                                                                           •
Partners must report all partnership items consistently with their         complete a single copy of the form, attach it to your tax return, 
treatment on the partnership return as shown on Schedule K-1               and file it when you file your original return.
(Form 1065-B). Only the partnership may file an AAR.                         If a TMP, PR, or ELP files Form 8082 as an AAR on behalf of 
                                                                           •
                                                                           the partnership, the TMP, PR, or ELP must complete the form, 
Interest and Penalties                                                     attach it to the partnership's amended tax return, and file it with 
If you disregard the requirements for filing Form 8082, you may            the service center where the original return was filed.
be subject to the accuracy-related penalty under section 6662 or           • If a partner in a TEFRA partnership or residual interest holder 
the fraud penalty under section 6663. Either penalty is in                 files Form 8082 as an AAR, it must be filed in duplicate. The 
addition to any tax that results from a computational adjustment           original copy is filed with the partner's or residual interest 
to make your amount or treatment of the item consistent with the           holder's amended income tax return, and the other copy is filed 
amount or treatment of the item on the pass-through entity's               with the service center where the pass-through entity return is 
return.                                                                    filed. See Notice of inconsistent treatment filed with return, later, 
Interest. Generally, interest is charged on taxes not paid by the          under Part II.
due date, even if an extension of time to file is granted. Interest is       Generally, a pass-through entity may file an AAR to change 
also charged on penalties imposed for negligence, fraud,                   items on its return:
substantial valuation misstatements, substantial                             1. Within 3 years after the later of:
understatements of tax, and reportable transaction 
understatements. The interest is charged from the due date                   • The date on which the pass-through entity return for that 
(including extensions) to the date of payment. The interest                  year is filed, or
charge is figured at a rate determined under section 6621.                   • The last day for filing the pass-through entity return for that 
                                                                             year (excluding extensions); and 
Late payment penalty. The penalty for not paying the tax when                2. In the case of a TEFRA partnership or REMIC, before a 
due is usually 1/2 of 1% of the unpaid tax for each month or part          notice of final partnership administrative adjustment for that year 
of a month that the tax remains unpaid. The penalty cannot                 is mailed to the TMP or tax matters person; or, in the case of an 
exceed 25% of the unpaid tax.                                              ELP, before the mailing to the partnership of a notice of 
Other penalties. Penalties can also be imposed for negligence,             partnership administrative adjustment with respect to that year; 
substantial understatements of tax, reportable transaction                 or
understatements, and fraud. See sections 6662, 6662A, and                    3. In the case of a BBA partnership, before a notice of an 
6663.                                                                      administrative proceeding with respect to the tax year is mailed 
Interest and penalties applicable to imputed underpayment                  under section 6231.
(IU).  Except when the partnership elects to have its partners               A partnership return or a REMIC return is generally due by the 
take into account the adjustments, BBA partnership interest and            15th day of the 3rd month following the close of the partnership's 
penalties are the following.                                               or REMIC's tax year. The tax year of a REMIC always ends on 
                                                                           December 31.

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Special rules apply if the period of limitations has been In either case, the partnership is liable for any interest and
extended by agreement and in the case of a TEFRA AAR that penalties on the IU that results from the adjustment. See section
relates to the deductibility of bad debts or worthless securities. 6242(b) for details. Interest is figured on the IU for the period
See sections 6227 (prior to amendment by BBA) and 6251 for beginning on the day after the due date (excluding extensions)
details. of the partnership return for the adjusted year and ending on the
due date (excluding extensions) of the partnership return for the
What To Attach tax year the adjustment takes effect (or the date the partnership
If applicable, attach the following items to Form 8082. paid the tax due under (2) above, if earlier). The adjusted year
• If the corrected amount involves an item that must be is the partnership tax year in which the item being adjusted
supported with a schedule, statement, or form, attach the arose.
appropriate schedule, statement, or form. Include the entity's How to file. Attach Form 8082 to an amended Form 1065-B for
name and employer identification number (EIN) on any the adjusted year. Enter in the top margin of the amended return,
attachments. See the instructions for Forms 1065, 1065-B, or “See attached Form 8082 for AAR per IRC section 6251.” Be
1066 (as applicable) for a list of forms that may be required. sure to check box G(4) on page 1 of the amended return. Identify
Note. If the attachments needed to support the corrected in Part II of Form 8082 the amount and treatment of any item the
amount include copies of forms or schedules from previously partnership is changing from the way it was reported on the
filed tax returns, write at the top of each previously filed form or original return. If the partnership elects to pay the tax, enter it on
schedule, “Copy Only—Don't Process.” line 26 of page 1 of the amended Form 1065-B. Don't enter any
• A BBA partnership must attach a schedule to the Form 8082 other amounts on the amended Form 1065-B. Attach a
that supports the position(s) reported. If the partnership doesn’t computation of the tax to Form 8082. The IRS will bill the
make an election under section 6227(b)(2) to have the partnership for any interest and penalties it owes.
adjustments taken into account by the reviewed year partners
and would like to modify per section 6227(b)(1), it must attach a If the income, deductions, credits, or other information
Form 8980, Partnership Request for Modification of Imputed provided to any partner on Schedule K-1 is incorrect, file an
Underpayments Under IRC Section 6225(c), that supports any amended Schedule K-1 (Form 1065-B) for that partner(s) with
modifications made to the IU as described in sections 6225(b) Form 8082. Also give the partner(s) a copy.
and 6225(c) and as applied to a BBA AAR under section
6227(b)(1). See Modifications to an Imputed Underpayment AAR With Election Into the Centralized
Included in an Administrative Adjustment Request in the Form Partnership Audit Regime Under BBA
8980 instructions. Certain partnerships may elect to have the new centralized
• Attach Forms 8985 and 8986, as applicable. Form 8986 is partnership audit regime apply to a return filed for an eligible tax
used by BBA partnerships to furnish and transmit each partner’s year when filing an AAR under section 6227. An eligible tax year
share of adjustments to PRIs. See the instructions for Forms is any tax period beginning after November 2, 2015, and before
8985 and 8986 for more information. January 1, 2018. Only partnerships can file an AAR under
• If the AAR is a request for an electronically deposited refund section 6227. A partnership may not make this election where:
of $1 million or more, attach Form 8302, Electronic Deposit of • An AAR has been filed on behalf of the partnership under
Tax Refund of $1 Million or More. section 6227(c) (prior to amendment by BBA), or
• An amended return for the partnership has been filed. See
Judicial Review of an AAR (for Returns Subject Regulations section 301.9100-22(c)(4).
to the TEFRA Procedures or ELPs) An AAR filed for an eligible tax year before January 1, 2018,
If the IRS fails to act on an AAR, the TMP or PWA may file a will be treated as an AAR filed on behalf of a TEFRA partnership
petition for judicial review with the U.S. Tax Court, U.S. Court of or as an amended return filed on behalf of a nonTEFRA
Federal Claims, or U.S. District Court. The TMP or PWA must partnership, as applicable. An AAR filed after January 1, 2018,
file the petition before the date that is 2 years after the date the for an eligible tax year without a statement attached to the AAR
TMP or PWA filed the AAR, but not until after the date that is 6 on which the partnership makes the election into the centralized
months from the date of such filing. The 2-year period may be partnership audit regime will be treated as an AAR filed on
extended if the IRS and the TMP or PWA agree in writing. For behalf of a TEFRA partnership or as an amended return filed on
more details, see sections 6228 (prior to amendment by BBA) behalf of a nonTEFRA partnership, as applicable. Once made,
and 6252. an election may only be revoked with the consent of the IRS.
Special Rules for ELPs for Tax Years Beginning Note. An AAR filed with respect to a 2018 short tax period
Before 2018 return by a partnership that is subject to the centralized
partnership audit regime must meet the requirements under
An ELP may file an AAR to adjust partnership items. However, a section 6227.
partner may not file an AAR. Generally, the ELP has two choices
for handling the adjustment. Making the election. To make the election, the partnership
must write across the top of Form 1065 used to file the AAR,
1. It can combine the adjustment with the same partnership
“Election under Section 1101(g)(4)” and attach a statement to
item for the year in which the IRS allows the adjustment and
the AAR. For the statement requirement, the partnership can use
pass it through to the current partners for that year. However, if
Form 7036, Election Under Section 1101(g)(4) of the Bipartisan
the adjustment involves a reduction in a credit that exceeds the
Budget Act of 2015. If Form 7036 is not used, the partnership
amount of that credit for the partnership tax year in which the
may prepare its own statement with the following information.
adjustment is allowed, the partnership must pay tax in an
amount equal to that excess amount. • The partnership's name and taxpayer identification number
(TIN), and the partnership tax year for which the election is being
2. It may elect to not pass the adjustment through to current made.
partners by paying tax on any IU that results from the • The name, TIN, address, and daytime telephone number of
adjustment, as explained in section 6242(b)(4), prior to the individual who signs the statement.
amendment by BBA. • Language indicating that the partnership is electing
application of section 1101(c) of BBA for the partnership return
for the eligible tax year.
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• The information required to properly designate the PR as Filing an AAR electronically. If the AAR is filed electronically,
defined by section 6223, which must include the name, taxpayer and if an election is being made under section 1101(g)(4) of
identification number, address, and daytime telephone number BBA, the partnership uses Form 1065 and Form 8082 and
of the PR. includes the statement “Election Under Section 1101(g)(4).”
• The following representations must be made on the statement
of election. Specific Instructions
1. The partnership is not insolvent and doesn’t reasonably Specific instructions for most of the lines have been provided.
anticipate becoming insolvent before resolution of any Lines that aren’t explained are self-explanatory. If, after reading
adjustment with respect to the partnership tax year for which the the instructions, you are unable to complete an item in Part I or
election is being made. Part II, enter “See Part III” in the entry space for that item and
2. The partnership hasn’t voluntarily filed, and doesn’t provide the information there.
reasonably anticipate filing, a petition for relief under title 11 of
the United States Code. Note. If the pass-through entity didn’t file a return or give you a
Schedule K-1, Schedule K-3 (and according to the instructions
3. The partnership is not subject to, and doesn’t reasonably for Schedule K-2, the pass-through entity was required to
anticipate becoming subject to, an involuntary petition for relief provide one to you), Schedule Q, and/or foreign trust statement
under title 11 of the United States Code. by the time you are required to file your return, complete Parts I
4. The partnership has sufficient assets, and reasonably and II to the best of your knowledge.
anticipates having sufficient assets, to pay a potential IU with
respect to the partnership tax year that may be determined Name and Identifying Number
under subchapter C of chapter 63 of the Internal Revenue Code, Print or type the legal name of the entity and identifying number
as amended by BBA. on the appropriate lines.
• A representation, signed under penalties of perjury, that the
individual signing the statement is duly authorized to make the Part I—General Information
election described in Regulations section 301.9100-22 and that,
to the best of the individual's knowledge and belief, all of the Line 1
information contained in the statement is true, correct, and
complete. Check box (a) if you believe an item wasn’t properly reported on
• The statement must be signed and dated by the TMP, as the Schedule K-1, Schedule K-3, Schedule Q, Form 8986 (only
defined under section 6231(a)(7) (prior to amendment by BBA), issued with respect to an AAR), and/or foreign trust statement
and the applicable regulations, or an individual who has the you received, or if you haven’t received a Schedule K-1,
authority to sign the partnership return for the tax year. The fact Schedule K-3 (that the pass-through entity was required to
that an individual dates and signs the statement making the provide according to the instructions for Schedule K-2),
election shall be prima facie evidence that the individual is Schedule Q, or foreign trust statement by the time you are
authorized to make the election on behalf of the partnership. required to file your tax return (including extensions).
Imputed underpayment (IU). Partnerships filing an AAR with Check box (b) if you are filing an AAR on which you are
an election into the centralized partnership audit regime under requesting a change in the amount or treatment of any item from
BBA will need to determine if any partnership adjustment as the way you reported it on your return as originally filed or as you
defined by section 6241(2) results in an IU as described in later amended it.
section 6225(b). See section 6225(c), excluding paragraphs (2),
(7), and (9), for guidance regarding the modification rules that Note. A partnership-partner that is also a BBA partnership that
may apply to an IU. is filing an AAR that is inconsistent with a Schedule K-1,
If modification is applied to an IU, the AAR must include Schedule K-3, and/or Form 8986 it received (only with respect to
detailed documentation to support all modifications made to the an AAR) will check both boxes (a) and (b). A partner (including a
IU. partnership-partner) cannot file inconsistently with a Form 8986
Unless the partnership elects under section 6227(b)(2) to it is issued with respect to an audited partnership.
have the partners take the adjustments into account, if the Subject to the particular filing rules, an AAR can be filed by
partnership adjustment results in an IU, the partnership must partnerships subject to TEFRA proceedings (TEFRA AAR),
report and pay the IU and any interest and penalty associated
partnerships subject to BBA proceedings (BBA AAR), and ELPs.
with the IU at the time the AAR is submitted. See Interest and An AAR can also be filed by the following partners:
penalties applicable to imputed underpayment (IU), earlier.
• Partners of a TEFRA partnership;
Unless the calculation of the IU contains a permitted rate • Residual interest holders; or
modification per section 6225(c)(4), the IU will be figured using • Partnership-partners in a BBA partnership (but only for the
the highest rate in effect under section 1 or 11 for the tax year to purpose of providing notice of inconsistent treatment with the
which the adjustment relates. Write “BBA Imputed AAR). See Regulations section 301.6227-1(a) referring to
Underpayment” in the bottom margin of page 1 of Form 1065 Regulations section 301.6222-1. See Part II, later.
and include the IU and any interest or penalties related to the IU.
For partnership tax years beginning before January 1,
If the partnership elects under section 6227(b)(2) to have the 2018 (unless electing into BBA).
partners take the adjustments into account or there are
TEFRA AAR. The consolidated audit proceedings of sections
adjustments that don't result in an IU, the partnership is required
6221 through 6234 (prior to amendment by BBA) are referred to
to furnish statements to each partner of the partnership for the
as “TEFRA proceedings.” Partnerships that are subject to
reviewed year, and file statements with the AAR. See the
TEFRA proceedings are referred to as “TEFRA partnerships.”
instructions for Forms 8985 and 8986 for more information.
An AAR filed by the TMP of the TEFRA partnership is a TEFRA
Note. BBA partnerships must file an AAR instead of an AAR. The Form 8082 is also used by any partner in a TEFRA
amended return and will not attach amended Schedules K-1 to partnership filing an AAR. TEFRA proceedings will not apply to
the AAR. See IRS.gov/BBAAAR for instructions for electronically partnerships with tax years beginning after 2017. A partnership
submitting a BBA AAR.

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with a tax year beginning before 2018 that is not subject to valid election under section 6227(b)(2) to have each reviewed
TEFRA proceedings is referred to as a “nonTEFRA partnership.” partner take its share of adjustments into account. See items B,
TEFRA partnerships requesting substituted return C, and D that follow.
treatment. A substituted return requests that the treatment of Item A. If the "Yes" box is checked, complete Form 8979 and
an item shown on the AAR be substituted for the treatment of the attach it to the AAR. See the Instructions for Form 8979.
item on the pass-through entity's return. If the IRS allows Item B. BBA partnerships filing an AAR will need to
substituted return treatment, the changes shown on the determine if the partnership adjustments result in an IU. See
amended return will be treated as corrections of mathematical or Figuring the IU, later, for information as to how to figure the IU.
clerical errors, and the IRS may assess any resulting tax to the The BBA partnership should consider all available guidance
partners or residual interest holders without a deficiency or entity issued by the IRS in making a determination of whether or not
level proceeding, or partners or residual interest holders may file the AAR results in an IU. Also see IU Under the Centralized
an amended return requesting a refund. See section 6227(c)(1) Partnership Audit Regime, later, for discussion of the IU.
(prior to amendment by BBA).
If you are a TMP filing a TEFRA AAR on behalf of the Note. An IU calculation must always be made and presented on
partnership and requesting substituted return treatment, attach a the AAR (even when that IU is zero or less than zero or the
statement to Form 8082 indicating that you are requesting adjustments don't result in an IU). See Figuring the IU, later,
substituted return treatment. under Part III for more information.
Item C. If the adjustments contained in the BBA AAR result in
If the request is not treated as a substituted return, the
an IU, the partnership must pay the IU at the same time the AAR
partners or residual interest holders may file an amended return
is filed. However, under section 6227(b)(2), the partnership can
requesting a refund. The IRS may conduct an examination of the
elect to have its reviewed year partners take the adjustments
pass-through entity’s return, or take no action on the request.
into account. This is an election to push out the adjustments to
When a request is not treated as a substituted return, the IRS
the partners as alternative to payment of the IU. See section
cannot assess tax without a deficiency or entity level
6226(a)(2) for details. If this valid election is made, the
proceeding. See section 6227(c)(2) (prior to amendment by
partnership is no longer liable for the IU.
BBA).
If the adjustments in the BBA AAR don't result in a positive IU
In either case, if you are a TMP filing an AAR electronically,
or the BBA partnership makes a valid election under section
file an amended Form 1065, but don't enter any amounts on the
6227(b)(2), the partnership must furnish to each partner of the
form itself. Attach Form 8082 and identify the amount and partnership for the reviewed year a Form 8986 reflecting the
treatment of any item you are changing from the way it was
partner’s share of the adjustments.
reported on the original return. The TMP must sign the amended
return. The partnership is also required to file with the AAR all Forms
8986 furnished to partners and Form 8985. See the instructions
Attach amended Schedules K-1 showing the corrected
for these forms for further information.
amounts for each partner.
Item D. Each reviewed year partner is required to take into
ELP AAR. The ELP procedures were repealed for tax years
account its share of adjustments requested in a BBA AAR if the
beginning after 2017. However, ELPs filing an AAR after 2017
partnership adjustments result in an IU and the partnership
for a tax year that began before 2018 will use Form 8082.
makes the alternative to payment election discussed under Item
For partnership tax years beginning after 2017 and part- C above. Additionally, each reviewed year partner is required to
nerships electing into BBA for tax years beginning after take into account its share of any adjustments requested in a
November 2, 2015, and before January 1, 2018. BBA AAR that don't result in an IU. The determination of whether
BBA AAR. All partnerships with tax years beginning after or not an adjustment results in an IU amount is discussed earlier
2017 are subject to the centralized partnership audit regime under Item B.
unless an eligible partnership makes a valid election under The partnership is required to furnish each reviewed year
section 6221(b) to elect out of the centralized partnership audit partner with a Form 8986 reporting its share of the BBA AAR
regime. adjustments. The PR must attest to the partnership’s compliance
Partnerships electing into BBA for tax years beginning after with this requirement. The PR will manually sign the Form 8082
November 2, 2015, and before January 1, 2018, are also subject under Item D to declare under penalties of perjury that all
to the centralized partnership audit regime. Partnerships that are statements have been provided to the reviewed year partners as
subject to the centralized partnership audit procedures of required by these instructions. If filing electronically, Form 8082
sections 6221 through 6241 are referred to as “BBA should be attached as a PDF to Form 1065.
partnerships.” A partnership with a tax year beginning after 2017 Item E. Under section 6227(b)(1), the partnership may modify
that is not subject to BBA proceedings because it has made a the IU resulting from adjustments reported in a BBA AAR in
valid election under section 6221(b) is referred to as a “nonBBA accordance with the provisions under section 6225(c),
partnership.” An AAR filed by a BBA partnership is a BBA AAR. disregarding the provisions under paragraphs (2), (7), and (9).
If a BBA partnership files an AAR and it needs to make its Any modification made to the IU under section 6227(b)(1) must
partners aware of their allocable share of adjustments, it will be disclosed and fully explained on Form 8980 included with the
furnish to each partner of the partnership for the reviewed year a AAR.
Form 8986 reflecting the partner’s share of the adjustments (and
should not provide amended Schedules K-1 or K-3). The Note. If the partnership makes an election to push out the
partnership is also required to file with the AAR any Forms 8986 adjustments to the partners as an alternative to payment of the
required to be furnished to partners along with Form 8985. See IU, the modifications to the IU are disregarded and aren’t
the instructions for these forms for further information. included on the statements provided to the partners.
The partnership will need to furnish such statements to make Lines 2 through 6. Generally, the information for these lines
its partners aware of their allocable share of adjustments when can be found on Schedule K-1, Form 8986, Schedule Q, or the
(1) the adjustments in the BBA AAR result in an IU of zero or less foreign trust statement.
than zero or the adjustments don’t result in an IU, or (2) the Line 6, Tax year of pass-through entity. If you are a
adjustments in the BBA AAR do result in an IU greater than zero partner filing a notice of inconsistent treatment from a Form 8986
but (as an alternative to payment) the BBA partnership makes a received as a result of a BBA partnership AAR, use the date

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contained in Part II, box D (“Review year of the partnership”), package) pertaining to the adjustments that don't result in an
from the Form 8986. IU (if applicable).
b. If pushing out all the adjustments to the reviewed year
Part II—Inconsistent or Administrative partners, complete Form 1065. Also complete Forms 8985
Adjustment Request (AAR) Items and 8986 (pushout package).
5. File Form 8082 along with Form 1065, and attach any
TEFRA partnerships and ELPs filing AARs. If a TEFRA other supporting documents required, including copies of Forms
partnership/ELP is filing an AAR to change items that were 8985 and 8986 (if applicable).
reported on its original return, do the following.
6. If applicable, distribute the Forms 8986 to reviewed year
1. Determine the required changes to be made. partners according to the Form 8986 instructions.
2. Complete Form 8082 to identify the changes being made.
a. On Form 8082, check box (b) under Part I, line 1. Partner filing a notice of inconsistent treatment for a
b. See Lines 8 through 11, later, for how to complete Schedule K-1 and/or Schedule K-3 received from a BBA
columns (a) through (e) of Part II. partnership. When a partner receives a Schedule K-1 and/or
Schedule K-3 from a BBA partnership, it must generally file
3. Complete Form 1065. consistently with that Schedule K-1 and/or Schedule K-3.
a. File an amended Form 1065 (checking box G5). However, a partner may file inconsistently if it provides valid
b. The TMP must sign the amended return. notice to the IRS of inconsistent treatment.
c. Attach amended Schedules K-1 showing the corrected Notice of inconsistent treatment filed with return. If a
amounts for each partner. pass-through partner doesn’t receive a Schedule K-1 and/or
4. File Form 8082 along with Form 1065 and attach any Schedule K-3 (and the pass-through entity was required to
other supporting documents required. provide one to you according to the instructions for
5. Give a copy of the amended Schedules K-1 to the Schedule K-2) from a BBA partnership or does receive a
applicable partners. Schedule K-1 and/or Schedule K-3 but disagrees with some or
all of the reported treatment and/or amounts, it may file a notice
TEFRA partner filing an AAR. If a partner in a TEFRA of inconsistent treatment with its return (original or amended/
partnership is filing an AAR to change items associated with its AAR). To do so, as a pass-through partner, you will include Form
investment in the TEFRA partnership that were reported on its 8082 with your return (for example, Form 1065, Form 1120-S)
original return, do the following. and prepare your return using the treatment and/or amounts you
determine are correct.
1. Determine the required changes to be made.
1. On Form 8082, check box (a) under Part I, line 1 (and box
2. Complete Form 8082 to identify the changes being made.
(b), if applicable).
a. On Form 8082, check box (b) under Part I, line 1.
2. See Lines 8 through 11, later, for how to complete
b. See Lines 8 through 11, later, for how to complete
columns (a) through (e) of Part II.
columns (a) through (e) of Part II.
3. Complete the applicable amended return. 3. File Form 8082 along with the applicable return and
attach any other supporting documents required.
4. File Form 8082 along with the applicable amended return
and attach any other supporting documents required. Pass-through partner filing a notice of inconsistent treat-
ment for a Form 8986 received from a BBA partnership fil-
Partner filing a notice of inconsistent treatment for a ing an AAR. When a pass-through partner receives a Form
Schedule K-1 received from a TEFRA partnership. If a 8986 (“pushout statement”) as a result of an AAR filed by a BBA
partner doesn’t receive a Schedule K-1 from a TEFRA partnership in which it is an indirect or direct investor, that
partnership or does receive a Schedule K-1 but disagrees with pass-through partner will (prior to the date contained in box F of
some or all of the reported treatment and/or amounts, it may file Part II on the Form 8986) take one of the following actions.
a notice of inconsistent treatment. • Push out all the adjustments that are on the Form 8986 to its
1. On Form 8082, check box (a) under Part I, line 1. partners/shareholders/beneficiaries.
2. See Lines 8 through 11, later, for how to complete • For the adjustments resulting in an IU, pay an IU on those
columns (a) through (e) of Part II. adjustments and prepare and issue to its partners/shareholders/
beneficiaries a pushout statement package for those
3. File Form 8082 along with the applicable return and adjustments that don't result in an IU.
attach any other supporting documents required.
Note. Pass-through partners aren’t permitted to apply
BBA partnerships filing AARs. If a BBA partnership is filing modifications to the IU.
an AAR to change items that were reported on its original return, • Where the Form 8986 only contains adjustments that don't
do the following. result in an IU, prepare a pushout statement package for those
1. Determine the required changes to be made. adjustments and issue to its partners/shareholders/beneficiaries.
2. Complete Form 8082 to identify the changes being made. However, a pass-through partner may file inconsistently if it
a. On Form 8082, check box (b) under Part I, line 1. provides valid notice to the IRS of inconsistent treatment.
b. See Lines 8 through 11, later, for how to complete
columns (a) through (e) of Part II. Note. Any partner that receives a Form 8986 as a result of an
audit is not permitted to treat items on that Form 8986
3. Figure an IU and determine if there are any adjustments inconsistently and must report consistently with the information
that don't result in an IU. provided on the Form 8986.
4. Determine if you will pay the IU or push out the Notice of inconsistent treatment filed with a Form 8985.
adjustments to the partners. A pass-through partner receiving a Form 8986 (as a result of a
a. If paying an IU, complete Form 1065 and report the IU BBA partnership filing an AAR and not as a result of an audit)
appropriately. Complete Forms 8985 and 8986 (pushout may (prior to the date contained in box F of Part II on the Form
8986) file inconsistently from that 8986 if the pass-through

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partner provides valid notice to the IRS of inconsistent treatment. Column (b).
To provide a notice of inconsistent treatment in these AAR. If you are filing an AAR, check the box under “Amount
circumstances as a pass-through partner, do one of the of item” if you are changing the amount from what was
following. previously filed. Check the box under “Treatment of item” if you
1. Prepare a pushout package for all adjustments (including are reporting the amount unchanged but are changing another
any items that are treated inconsistently, as reported on the treatment of the item. Check both boxes if you are changing the
Form 8082) in accordance with the instructions for Forms 8985 amount and another treatment besides amount.
and 8986. Inconsistent treatment. If you believe that the amount of
a. Using all adjustments, whether being treated consistently any item shown on Schedule K-1, Schedule K-3, Schedule Q,
or inconsistently, prepare a pushout package for your Form 8986 (as a result of a BBA AAR, and not as a result of an
partners, shareholders, etc., according to the instructions for audit), and/or a foreign trust statement wasn’t properly reported,
Forms 8985 and 8986. check “Amount of item.”
b. Complete Form 8082. Attach the completed Form 8082 If you believe that treatment of any item (other than the
and a copy of the Form 8986 received to the pushout amount of the item) wasn’t properly reported (such as a
package (Forms 8985 and 8986) filed with the IRS. long-term capital loss that a partner thinks should be an ordinary
2. Pay an IU for all adjustments (including any items that are loss), check “Treatment of item.”
treated inconsistently as reported on the Form 8082). Check both parts of column (b) if either (1) or (2) below
a. Prepare a Form 8985 (and Forms 8986 for partners, if applies.
applicable) according to the instructions for Forms 8985 and 1. You believe that both the amount and another treatment
8986. The Form 8985 should be prepared using the (besides the amount) of the item shown on Schedule K-1,
adjustments that are being treated both consistently and Schedule K-3, Schedule Q, Form 8986 (as a result of a BBA
inconsistently. AAR, and not as a result of an audit), and/or a foreign trust
b. Complete Form 8082. Attach the completed Form 8082 statement weren’t properly reported, or you believe an item was
and a copy of the Form 8986 received to the Form 8985 omitted from the form.
(and Forms 8986, if applicable) filed with the IRS. 2. The pass-through entity didn’t file a return or give you a
c. In making the IU calculation for the Form 8985, the Schedule K-1, Schedule K-3 (and the pass-through entity was
adjustments should be determined for each item (including required to provide one to you according to the instructions for
any item treated inconsistently) by taking the difference Schedule K-2), Schedule Q, and/or foreign trust statement.
between the amount you previously reported and the
amount you are now reporting. Note. If you check only “Treatment of item,” you don't need to
d. Additionally, for any of the consistently and inconsistently complete columns (d) and (e).
treated adjustments that don't result in an IU, prepare a
pushout package for partners according to the instructions Column (c).
for Forms 8985 and 8986. AAR. If you are filing an AAR, report the amount you
previously reported for the item listed in column (a).
See Lines 8 through 11 below for how to complete columns (a) Inconsistent treatment. If you attach Form 8082 to your
through (e) of Part II. return, to make a notice of inconsistent treatment, enter the
Other than pass-through partner filing a notice of inconsis- amount as shown on the Schedule K-1, Schedule K-3,
tent treatment from a BBA partnership. If you are a partner Schedule Q, and/or foreign trust statement you received.
(other than a pass-through partner) filing inconsistently from a If the pass-through entity didn’t file a return, or if you didn’t
BBA partnership (that is, inconsistently from a Schedule K-1, a receive a schedule or statement, or if you are reporting items
Schedule K-3, and/or a Form 8986 you received as a result of a that you believe were omitted, enter zero in column (c).
BBA partnership filling an AAR, and not as a result of an audit),
complete Form 8082 and attach it to your original return or If you receive a Form 8986 as a result of a BBA AAR (and not
amended return. See Lines 8 through 11 below for how to as a result of an audit); to make a notice of inconsistent
complete columns (a) through (e) of Part II. treatment, do the following.
• Pass-through partner preparing Form 8985. Attach a Form
Lines 8 through 11. 8082 to the Form 8985 you file.
Column (a). • Other than pass-through partner. Attach a Form 8082 to the
copy of the return (or amended return) you file.
AAR. If you are filing an AAR, enter the line number and
description from the form for which you are making the change. If treating any liabilities or capital items reported to you on the
For example, if you are changing the amount reported on Form 8986, Part IV, inconsistently, enter the item amount from
Schedule K, line 1, enter “Schedule K, line 1.” that Form 8986 as shown in the “Corrected” column from Part IV
Inconsistent treatment. If you received a Schedule K-1, of that form in column (c) of Form 8082.
Schedule K-3, Schedule Q, Form 8986 (as a result of a BBA If treating an item of income, gain, loss, deduction, or credits,
AAR, and not as a result of an audit), and/or foreign trust or other items reported to you on Form 8986, Part V,
statement, enter the line number and description shown on the inconsistently, enter the sum of column (d) and column (h) from
form. Otherwise, enter a complete description of the item. Part V of that form in column (c) of Form 8082.
If you didn’t receive a Schedule K-1, Schedule K-3, If treating any items reported to you on the Form 8986, Part
Schedule Q, and/or foreign trust statement but are still reporting VI, inconsistently, enter that item amount from the Form 8986 in
estimated amounts on your original filing, enter a completed column (c) of Form 8082.
description of the item and where you are reporting the Column (d). Enter the amount you are reporting as the correct
estimated amount on your original return. For example, if you are amount in column (d).
a BBA partnership-partner providing notice of inconsistent
treatment for a Form 8986 received (as a result of a BBA AAR, Column (e). Enter the net increase or decrease for each line
and not as a result of an audit), enter the information from the being changed in column (e). Enter as a positive the amount by
first three columns of the Form 8986, Part V, that you are treating which column (d) exceeds column (c) or enter as a negative the
inconsistently. amount by which column (c) exceeds column (d). Use

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parentheses around all amounts that are negative. Explain the to have its reviewed year partners take all the adjustments into
reason for the change (increase or decrease) in Part III. account.
Part III—Explanations Under section 6227(b)(1), the partnership may modify the IU
Explain in detail the reasons you are reporting an inconsistent or resulting from adjustments reported in a BBA AAR in
corrected amount/item as follows. accordance with the provisions under section 6225(c),
• If you believe that the amount or other type of treatment of any disregarding the provisions under section 6225(c)(2), (7), and
item shown on Schedule K-1, Schedule K-3, Schedule Q, Form (9). Any modification made to the IU under section 6227(b)(1)
8986 (as a result of a BBA AAR, and not as a result of an audit), must be disclosed and fully explained in documentation included
and/or a foreign trust statement wasn’t properly reported, state with the AAR. If modifications are applied to the IU, complete
how you think the item should be treated and why. and attach Form 8980 and report the modified IU amount on
• If the pass-through entity hasn’t filed a tax return by the time Form 1065, page 1, line 25.
you are required to file your tax return, enter as the explanation,
“Partnership (S corporation, Estate, Trust, or REMIC) return not The applicability of interest and penalties are discussed
filed.” above. The BBA AAR may include a prepayment for interest and
• If the pass-through entity didn’t give you a Schedule K-1, penalties. If making prepayments, the AAR should include
Schedule K-3 (and the pass-through entity was required to documentation that supports the calculations. A payment made
provide one to you according to the instructions for with the Form 1065 should detail the portion of the payment that
Schedule K-2), Schedule Q, and/or foreign trust statement by is for the IU, the portion that is for prepaid estimated interest, and
the time you are required to file your tax return, enter as the the portion that is for prepaid estimated penalties. The total of all
explanation, “Schedule K-1 (Schedule K-3, Schedule Q, and/or three should be reflected on Form 1065, page 1, line 25.
foreign trust statement) not received.” Under section 6232(b), partnerships filing a BBA AAR that
have adjustments that result in an IU, and don't elect the
IU Under the Centralized Partnership Audit alternative to payment of the IU (by not electing to push out the
Regime adjustments to the reviewed year partners), must pay the IU,
which should be shown on Form 1065, page 1, line 25, at the
BBA AARs must always include a computation of the IU (even same time that the AAR is filed. Information to include on the
when the IU is zero or less than zero or the adjustments don't payment made by check is the name of the partnership, “Form
result in an IU), as determined under section 6225(b). 1065,” the TIN of the partnership, the tax year, and “BBA AAR
Documentation should be included with the AAR that supports Imputed Underpayment.” Checks must be made payable to
the computation of the IU amount. The BBA partnership should “United States Treasury” and included with the BBA AAR. If
consider all available guidance issued by the IRS when figuring making an electronic payment, choose the payment description
the IU amount for an AAR. If the calculated IU amount results in “BBA AAR Imputed Underpayment” from the list of payment
an amount greater than zero and the partnership does not elect types.
under section 6227(b)(2) to have its reviewed year partners take
the adjustments into account, the IU amount should be reported Figuring the IU
on Form 1065, page 1, line 25. Definitions
• If the adjustments requested in the AAR result in an IU,
generally the partnership must pay the IU. Adjustments Reallocation grouping. In general, any adjustment that
requested in the AAR that don't result in an IU must be taken into allocates or reallocates a PRI to and from a partner or partners is
account by each reviewed year partner as if the partnership had a reallocation adjustment, except for an adjustment to a credit or
made an election under section 6227(b)(2), but only with regard to a creditable expenditure. Each reallocation adjustment
to those adjustments that don't result in an IU. In this instance, generally results in at least two separate adjustments, each of
see Forms 8985 and 8986 and the related instructions for which becomes a separate subgrouping.
reporting amounts not included in the IU. Credit grouping. Any adjustment to a PRI that is reported or
• When filing an AAR, the partnership may elect under section could be reported by a partnership as a credit on the
6227(b)(2) to have the reviewed year partners take into account partnership’s return, including a reallocation adjustment to such
adjustments resulting in an IU. If the partnership makes the PRI, is placed in the credit grouping.
election, the partnership is not liable for, nor required to pay, the Creditable expenditure grouping. Any adjustment to a PRI
IU related to the adjustments. Additionally, if the IU calculation where any person could take the item that is adjusted (or item as
results in an amount that is zero or less than zero or the adjusted if the item wasn’t originally reported by the partnership)
adjustments don't result in an IU, then all adjustments are taken as a credit, including a reallocation adjustment to a creditable
into account by the reviewed year partners. However, the expenditure, is placed in the creditable expenditure grouping.
partnership may have withholding and reporting obligations Residual grouping. Any adjustment to a PRI that doesn’t
under chapter 3 or chapter 4 with respect to the adjustments belong in the reallocation, credit, or creditable expenditure
taken into account by the reviewed year foreign partners. See grouping is placed in the residual grouping. This grouping also
Forms 8985 and 8986 and their related instructions for how to includes any adjustment to a PRI that derives from an item that
report these adjustments to reviewed year partners. wouldn’t have been required to be allocated by the partnership
• If the partnership elects under section 6227(b)(2) to have its to a partner under section 704(b), such as an adjustment to a
reviewed year partners take all the adjustments into account, all liability amount on the balance sheet.
modifications by the partnership (that would have been allowed Subgrouping. Each adjustment is subgrouped according to
had the partnership paid an IU) aren’t allowed and are how the adjustment would be required to be taken into account
disregarded. separately under section 702(a). In general, a subgrouping
follows the Schedule K/K-1/K-2/K-3 line items, including any
Note. Regarding modifications, see Item E under Part I, earlier. alpha codes related to a Schedule K-1/K-2/K-3 line item.
• The partnership must always include an IU calculation, even Negative adjustment. A negative adjustment is any
when the IU is zero or less than zero or the adjustments don't adjustment that is a decrease in an item of gain or income, an
result in an IU or the partnership elects under section 6227(b)(2) increase in an item of loss or deduction, or an increase in an
item of credit or creditable expenditure.

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Net positive adjustment. An amount that is greater than adjustment of $100 (reversing improper allocation to Partner A)
zero which results from netting adjustments within a grouping or and a positive adjustment of $100 (making proper allocation to
subgrouping. A net positive adjustment includes a positive Partner B). These two adjustments cannot be netted. As a result,
adjustment that wasn’t netted with any other adjustment. A net the total net positive adjustment in the reallocation grouping is
positive adjustment includes a net decrease in an item of credit $100 and will be included in the TNPA.
(or creditable expenditure). Credit grouping.
Net negative adjustment. Any amount which results from • Generally, a decrease in credits is treated as a positive
netting adjustments within a grouping or subgrouping that is not adjustment, and an increase in credits is treated as a negative
a net positive adjustment. A net negative adjustment includes a adjustment.
negative adjustment that wasn’t netted with any other • A reallocation adjustment relating to the credit grouping is
adjustment. placed into two separate subgroupings and will not be netted
Total netted partnership adjustments (TNPA). The sum of together nor will they be netted with other credit adjustments.
all net positive adjustments in the reallocation grouping and the Creditable expenditure grouping.
residual grouping. • Generally, a decrease in creditable expenditures is treated as
Adjustments not resulting in an IU. After grouping, a positive adjustment to credits, and an increase in creditable
subgrouping, and netting the adjustments, the result of netting expenditures is treated as a negative adjustment.
with respect to any grouping or subgrouping that includes a • A reallocation adjustment relating to a creditable expenditure
particular partnership adjustment is a net negative adjustment or grouping is placed into two separate subgroupings and will not
the IU calculation results in an amount that is zero or less than be netted together.
zero. Any adjustments that don't result in an IU are taken into • A creditable expenditure is treated in this manner even if the
account by the reviewed year partners in accordance with partners claimed a deduction in lieu of a credit.
Regulations section 301.6227-3. • Each adjustment to a creditable expenditure is subgrouped
based upon the separate category of income to which the
Formula for Figuring the IU creditable expenditure relates and to account for any different
allocation of the creditable expenditure between partners. Two
or more adjustments to creditable expenditures are included
Figuring the IU within the same subgrouping only if each adjustment relates to
creditable expenditures in the same separate category, and
TNPA x rate* = each adjusted PRI would be allocated to the partners in the
+ Sum of net positive adjustments to same ratio had those items been properly reflected on the
creditable expenditure and credit originally filed partnership return.
groupings: Residual grouping. The residual grouping contains all
= Total Imputed Underpayment (IU) adjustments that don't fit into one of the other groups.
* Highest rate in effect for the reviewed year under section 1 or 11. Recharacterization adjustments. A recharacterization
adjustment will generally result in at least two separate
adjustments within the residual grouping.
The process of taking the adjustments shown on the AAR • One adjustment reverses the improper characterization of the
and inputting them into the formula shown in the previous table PRI.
requires an understanding of the concepts of grouping, • The other adjustment makes the proper characterization of
subgrouping, and netting. There are seven steps necessary in the PRI.
figuring an IU. The first three steps focus on grouping, • The adjustments that result from a recharacterization are
subgrouping, and netting. placed into separate subgroupings.

Steps in Figuring the IU Step 2—Subgrouping

Determine if any adjustment, within one of the four groupings,
Step 1—Grouping
needs to be subgrouped. Each adjustment is subgrouped
according to how the adjustment would be required to be taken
Place each adjustment into one of four groupings: reallocation, into account separately under section 702(a). If any adjustment
credit, creditable expenditure, and residual groupings. could be subject to any preference, limitation, or restriction
Reallocation grouping. A reallocation adjustment generally under the Internal Revenue Code (or not allowed, in whole or in
consists of at least two adjustments, one positive and one part, against ordinary income) if taken into account by any
negative, with each in a separate subgrouping. person, the adjustment is placed in a separate subgrouping from
• One part of the reallocation adjustment reverses the effect of all other adjustments within the grouping.
the improper allocation of a PRI.
• The other part of the adjustment makes the proper allocation Generally, each separate line item of Schedule K/K-1/K-2/K-3
of the PRI. or return schedule (that is, Schedule L, etc.) represents a
• Under the AAR rules, if one of the reallocation adjustments is separate and distinct subgrouping.
negative, such negative adjustments must be pushed out to the
proper partner(s). Example. Adjustments to ordinary income must be placed in
Don't net reallocation adjustments. As each part of a a different subgrouping than capital gain income or interest
income because each of those items is required to be separately
CAUTION subgrouping within the reallocation grouping, those
! reallocation adjustment is placed in a separate stated under section 702(a).
adjustments cannot be netted in accordance with the netting • Subgroupings generally reflect a line item from
rules. Schedule K/K-1/K-2/K-3 including any subcategories of those
lines (for example, alpha codes per the Schedule K-1
Example. $100 of ordinary income is being reallocated from instructions or activities broken out via attached statements). If
Partner A to Partner B. For purposes of figuring the IU, there will any line item on Schedule K/K-1 or other schedules consists of
be two adjustments, each in a separate subgrouping: a negative multiple items and the components are required to be taken into
Instructions for Form 8082 (Rev. Jan. 2023) -11-

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account separately under the Internal Revenue Code,               that results after netting the adjustments is included in the 
regulations, forms, instructions, or other IRS guidance, then     calculation of the TNPA.
such line item must be further subgrouped.                        •    Each net negative adjustment with respect to a residual or 
  Example.   2019 Schedule K-1, box 13, code A (cash              reallocation grouping or subgrouping that results after netting the 
contributions 60%), and box 13, code B (cash contributions        adjustments is excluded from the calculation of the TNPA 
30%), are two separate subgroupings.                              because those adjustments don't result in an IU.
• The ordinary income/(loss) amount reflected on line 1 of 
Schedule K and in box 1 of Schedule K-1 is sourced from Form      Step 5—Determine the Highest Tax Rate in Effect 
1065, page 1, and is a net amount consisting of various page 1    Under Section 1 or 11 in the Reviewed Year
line items of income and expenses. Although those separate 
page 1 line items are distinct items of income and expense, if 
they are appropriately netted and included on line 1 of           Step 6—Determine the Sum of Net Positive 
Schedule K and box 1 of Schedule K-1, the net amount will be      Adjustments to Creditable Expenditure and Credit 
considered a single subgrouping, unless such amount is 
required to be separately allocated, such as when the             Groupings That Will Increase the Product of the 
partnership has more than one trade or business. If the           TNPA Multiplied by the Highest Rate in Effect
partnership has more than one trade or business activity, the net 
income/(loss) from each separate activity must be reported on     •    A net decrease to creditable expenditures is treated as a net 
Schedule K-1. Each separate activity will constitute a separate   positive adjustment to credits and increases the product of the 
subgrouping and it must be determined which activity an           TNPA multiplied by the highest tax rate in effect. A net increase 
adjustment to the page 1 item of income and expense relates to    to creditable expenditures is treated as a net negative 
for subgrouping purposes.                                         adjustment that is excluded from the calculation of the TNPA 
• If you have a negative adjustment along with a positive         and is an adjustment that doesn’t result in an IU.
adjustment in the same line item of Schedule K/K-1, you must      •    For the credit grouping, a net positive adjustment will increase 
consider whether they may be properly netted at the partnership   the product of the TNPA multiplied by the highest tax rate in 
level and whether they are required to be taken into account      effect. A net negative adjustment, including net negative 
separately by any partner because it may be subject to a          adjustments resulting from a credit reallocation adjustment, will 
limitation or preference under the Internal Revenue Code before   be treated as an adjustment that doesn’t result in an IU.
you can place them in the same subgrouping (for example, 
passive/active for separate activities).                          Step 7—Figure the IU Based on the Results of 
• A negative adjustment that is not otherwise required to be      Steps 4 Through 6 and Insert Those Results Into 
placed in its own subgrouping must be placed in the same 
subgrouping as another adjustment if the negative adjustment      the IU Formula
and the other adjustment would have been properly netted at the 
partnership level and such netted amount would have been                        Figuring the IU
required to be allocated to the partners of the partnership as a 
single item for purposes of section 702(a) or other provision of                TNPA x rate* =
the Internal Revenue Code and regulations.                             + Sum of net positive adjustments to 
                                                                       creditable expenditure and credit 
Step 3—Netting                                                                  groupings: 
                                                                       = Total Imputed Underpayment (IU)
Net all adjustments within each of the groupings and                   * Highest rate in effect for the reviewed year under section 1 or 11.
subgroupings.
• Positive adjustments may be netted with other positive 
adjustments only if they are in the same grouping. Negative 
adjustments may be netted with other negative adjustments only    Paperwork Reduction Act Notice
if they are in the same grouping.                                 We ask for the information on this form to carry out the Internal 
• Positive and negative adjustments may only be netted against    Revenue laws of the United States. You are required to give us 
each other if they are in the same subgrouping.                   the information. We need it to ensure that you are complying 
• An adjustment in one grouping or subgrouping may not be         with these laws and to allow us to figure and collect the right 
netted against an adjustment in any other grouping or             amount of tax.
subgrouping.                                                           You aren’t required to provide the information requested on a 
• All adjustments within a subgrouping are netted to determine    form that is subject to the Paperwork Reduction Act unless the 
whether there is a net positive adjustment or net negative        form displays a valid OMB control number. Books or records 
adjustment for that subgrouping.                                  relating to a form or its instructions must be retained as long as 
• Net positive adjustments from subgroupings or positive          their contents may become material in the administration of any 
adjustments within a grouping (if subgroupings are unnecessary)   Internal Revenue law. Generally, tax returns and return 
are netted to determine the net positive adjustment for that      information are confidential, as required by section 6103. The 
grouping. Net negative adjustments from subgroupings within a     time needed to complete and file this form will vary depending 
grouping are netted to determine the net negative adjustment for  on individual circumstances. The estimated burden for individual 
that grouping.                                                    taxpayers filing this form is approved under OMB control number 
                                                                  1545-0074 and is included in the estimates shown in the 
Step 4—Figure the Total Netted Partnership                        instructions for their individual income tax return.
Adjustment (TNPA)
• Each net positive adjustment with respect to a particular 
grouping or subgrouping in the residual or reallocation grouping 

                                                                  -12-          Instructions for Form 8082 (Rev. Jan. 2023)

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