1065-X Instructions for Form 1065-X

Instructions for Form 1065X

Department of the Treasury
Internal Revenue Service

(January 2019)

For use with Form 1065X (Revised September 2018)
Amended Return or Administrative Adjustment Request (AAR)
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Form 1065X and
its instructions, such as legislation
enacted after they were published, go to
IRS.gov/Form1065X.

What's New
Tax and payment. Form 1065X can be
used to report an imputed underpayment
(IU) and any interest and penalties related
to that IU.

Reminders

The Bipartisan Budget Act of 2015 (BBA)
created a new centralized partnership
audit regime generally effective for
partnership tax years beginning after
2017.
Election into BBA for tax years beginning before 2018. A partnership may
make an election into the centralized
partnership audit regime for tax years that
begin after November 2, 2015, and before
January 1, 2018, by filing an AAR. Please
refer to Regulations section 301.9100-22
for detailed information. If the AAR is filed
on paper, the partnership uses Form
1065X, Amended Return or Administrative
Adjustment Request (AAR), and must
make the election in accordance with
section 1101(g)(4) of BBA.
Making the election for eligible tax
years on an AAR filed on paper. To
make the election on an AAR filed on
paper, the partnership must write across
the top of Form 1065X used to file the
AAR, “Election under Section 1101(g)(4)”
and attach a statement to the AAR with
the following information.
• The partnership's name, taxpayer
identification number, and the partnership
tax year for which the election is being
made.
• The name, taxpayer identification
number, address, and daytime telephone
number of the individual who signs the
statement.
• Language indicating that the
partnership is electing application of
section 1101(c) of BBA for the partnership
return for the eligible tax year.
• The information required to properly
designate the partnership representative
Jan 24, 2019

as defined by section 6223, which must
include the name, taxpayer identification
number, address, and daytime telephone
number of the partnership representative.
See Partnership Representative in the
Instructions for Form 1065.
The following representations must be
made with regard to the statement attached to the election.
• The partnership is not insolvent and
does not reasonably anticipate becoming
insolvent before resolution of any
adjustment with respect to the partnership
tax year for which the election is being
made.
• The partnership has not voluntarily filed,
and does not reasonably anticipate filing,
a petition for relief under title 11 of the
United States Code.
• The partnership is not subject to, and
does not reasonably anticipate becoming
subject to, an involuntary petition for relief
under title 11 of the United States Code.
• The partnership has sufficient assets,
and reasonably anticipates having
sufficient assets, to pay a potential IU with
respect to the partnership tax year that
may be determined under subchapter C of
chapter 63 of the Internal Revenue Code
as amended by BBA.
• A representation, signed under
penalties of perjury, that the individual
signing the statement is duly authorized to
make the election described in
Regulations section 301.9100-22 and that,
to the best of the individual's knowledge
and belief, all of the information contained
in the statement is true, correct, and
complete.
The statement must be signed and
dated by the tax matters partner, as
defined under section 6231(a)(7) (prior to
the amendment by BBA), and the
applicable regulations, or an individual
who has the authority to sign the
partnership return for the tax year. The
fact that an individual dates and signs the
statement making the election shall be
prima facie evidence that the individual is
authorized to make the election on behalf
of the partnership.
Note. Unless otherwise noted, references
to sections 6221 through 6241 are to
Internal Revenue Code sections as
amended by BBA.

Cat. No. 57876S

Purpose of Form

Use Form 1065X, if you are not filing
electronically, to:
• Correct items on a previously filed Form
1065, Form 1065-B, or Form 1066;
• Make an Administrative Adjustment
Request (AAR) for a previously filed Form
1065, Form 1065-B, or Form 1066; or
• File an amended return by a
partnership-partner of a BBA partnership
as part of the modification process of a
BBA proceeding with respect to that BBA
partnership.
Form 1065X cannot be used to file a
notice of inconsistent treatment under
section 6222 (TEFRA or BBA) or a
partner-level AAR under section 6227(d)
(under TEFRA proceedings). Continue to
use Form 8082, Notice of Inconsistent
Treatment or Administrative Adjustment
Request (AAR), to make those changes.
Tax Equity and Fiscal Responsibility
Act of 1982 (TEFRA) Proceedings.
The consolidated audit proceedings of
sections 6221 through 6234 (prior to
amendment by BBA) are referred to as
TEFRA proceedings and partnerships that
are subject to TEFRA proceedings are
referred to as “TEFRA partnerships.”
TEFRA proceedings will not apply to
partnerships with tax years beginning after
2017. A partnership with a tax year
beginning before 2018 that is not subject
to TEFRA proceedings is referred to as a
“nonTEFRA partnership.”
Bipartisan Budget Act. All partnerships
with tax years beginning after 2017 are
subject to the centralized partnership audit
regime unless eligible partnerships elect
out by making a valid election under
section 6221(b). For purposes of these
instructions (unless otherwise noted), the
centralized partnership audit regime
proceedings under sections 6221 through
6241 will be referred to as BBA
proceedings.
If you are a nonTEFRA partnership
(see items B and C in Part I, Section 1) or
a nonBBA partnership (defined under
Definitions, later) filing an amended return
electronically, use Form 1065. If you are
not filing electronically, use Form 1065X.
Do not use Form 1065X to file any of
the following if the amended return or AAR
is required to be filed electronically or you
are electing to file the amended return or
AAR electronically.

• An amended return or AAR for a
TEFRA partnership (Form 1065).
• An amended return or AAR for an
electing large partnership (ELP) (Form
1065-B).
• An AAR for a BBA partnership (Form
1065).
Instead, use Form 8082 in conjunction
with Form 1065 or 1065-B.
Generally, the criteria used to
determine whether the original Form 1065
or Form 1065-B is required to be filed
electronically also are used to determine if
the amended return or AAR must be filed
electronically.
For information on when Form 1065 is
required to be filed electronically, and how
to file an amended return or AAR for a
partnership, see the Instructions for Form
1065.
For information on when Form 1065-B
is required to be filed electronically, and
how to file an AAR for an ELP, see the
Instructions for Form 1065-B.

Who Must File
Amended return. Partnerships and Real
Estate Mortgage Investment Conduits
(REMICs) that become aware of incorrect
items of income, deductions, etc., use
Form 1065X to correct their previously
filed partnership or REMIC return. See
Specific Instructions, later, for information
on completing Form 1065X as an
amended return.
AAR-Partnerships (except ELPs).
Partnerships that are subject to either BBA
or TEFRA proceedings use Form 1065X
to file for an AAR. See Specific
Instructions, later, for information on
completing Form 1065X as an AAR.
AAR under BBA. File Form 1065X if you
are the partnership representative or
designated individual requesting an
administrative adjustment to correct a
previously filed partnership return on
behalf of the partnership.
AAR-ELPs. ELPs that are not required to
electronically file Form 1065-B and need
to correct errors on a previously filed Form
1065-B use Form 1065X to file for an
AAR. See Specific Instructions, later, for
information on completing Form 1065X as
an AAR.
AAR-REMICs. REMICs that do not meet
the small REMIC exception under sections
860F(e) and 6231 (prior to amendment by
BBA), and related regulations, or make the
election described in section 6231(a)(1)
(B)(ii) (prior to amendment by BBA) not to
be treated as a small REMIC, use Form
1065X to file for an AAR. See Specific
Instructions, later, for information on
completing Form 1065X as an AAR.

When a partnership's or REMIC's

TIP federal return is changed for any

reason, it may affect its state
return. For more information, contact the
state tax agency to which the state return
is filed.

When To File

Generally, a partnership or REMIC may
file an amended return or AAR to change
items on its return:
1. Within 3 years after the later of:
• The date on which the partnership
return for that year is filed, or
• The last day for filing the partnership
return for that year (excluding extensions);
and
2. In the case of a TEFRA partnership
or REMIC, before a notice of final
partnership administrative adjustment for
that year is mailed to the Tax Matters
Partner (TMP) or Tax Matters Person, or,
in the case of an ELP, before the mailing
to the partnership a notice of partnership
administrative adjustment with respect to
that year.
3. In the case of a BBA partnership,
before a notice of an administrative
proceeding with respect to the tax year is
mailed under section 6231.
4. In the case of a partnership that is a
partner in a BBA partnership which is filing
an amended return for purposes of BBA
partnership modification under section
6225(c)(2), in the time period specified
under section 6225(c).

What To Attach

If the corrected amount involves an item
that must be supported with a schedule,
statement, or form, attach the appropriate
schedule, statement, or form to Form
1065X. Include the entity's name and
employer identification number (EIN) on
any attachments. See the instructions for
Form 1065, 1065-B, or 1066 (as
applicable) for a list of forms that may be
required.
If the attachments needed to support
the corrected amount include copies of
forms or schedules from previously filed
tax returns, write at the top of each
previously filed form or schedule, “Copy
Only—Do Not Process.”
A BBA partnership must attach a
schedule to Form 1065X that supports the
position(s) reported on Form 1065X which
results in an IU as described in section
6225(b). A BBA partnership must also
provide support for any modification of the
IU that is allowed under section 6225(c) as
applied to a BBA AAR under section
6227(b)(1).
In addition, if the ELP or REMIC
requests that the IRS electronically
deposit a refund of $1 million or more,
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attach Form 8302, Electronic Deposit of
Tax Refund of $1 Million or More.

Who Must Sign
NonTEFRA and nonBBA partnerships.
Any partner or limited liability company
(LLC) member must sign the return. Form
1065X is not considered to be a return
unless it is signed. When a return is made
for a partnership by a receiver, trustee, or
assignee, the fiduciary must sign the
return instead of the partner or LLC
member. Returns and forms signed by a
receiver or trustee in bankruptcy on behalf
of a partnership must be accompanied by
a copy of the order or instructions of the
court authorizing the signing of the return
or form.
BBA partnerships. The partnership
representative (PR) or designated
individual, if applicable, must sign the
Form 1065X. See Partnership
Representative, later, for the definition of a
PR.
TEFRA partnerships. The Tax Matters
Partner (TMP) must sign the amended
return. See Tax Matters Partner, later, for
the definition of a TMP.
ELPs. The partner with authority (PWA)
must sign the amended return. See
Partner with Authority, later, for the
definition of a PWA.
REMICs with a startup day after November 9, 1988. For these REMICs,
Form 1065X may be signed by any person
who could sign the return of the entity in
the absence of the REMIC election. Thus,
the return of a REMIC that is a corporation
or trust would be signed by a corporate
officer or a trustee, respectively. For
REMICs with only segregated pools of
assets, the return would be signed by any
person who could sign the return of the
entity owning the assets of the REMIC
under applicable state law.
REMICs with a startup day before November 10, 1988. These REMICs may
elect to apply the rules for REMICs with a
startup day after November 9, 1988 (as
described in Regulations section
1.860F-4(c)(2)(iii)). Otherwise, Form 1066
must be signed by a residual interest
holder or, as provided in section 6903, by
a fiduciary as defined in section 7701(a)
(6) who is acting for the REMIC and who
has furnished adequate notice as
described in Regulations section
301.6903-1(b).
In the prior paragraph, the term “startup
day” means any day selected by a REMIC
that is on or before the first day on which
interests in such REMIC are issued.
Otherwise, startup day is the day on which
the REMIC issued all of its regular and
residual interests. However, a sponsor
may contribute property to a REMIC in
Instructions for Form 1065X

exchange for regular and residual
interests over any period of 10
consecutive days and the REMIC may
designate any one of those 10 days as the
startup day. The day so designated is then
the startup day, and all interests are
treated as issued on that day.

Where To File

Form 1065X must be filed with the service
center where the original return was filed.

Definitions
BBA partnership. A partnership that is
subject to the new centralized partnership
audit regime will be known as a BBA
partnership. All partnerships with tax years
beginning after 2017 are BBA
partnerships unless they make a valid
election out of the centralized partnership
audit regime. A partner in a BBA
partnership will be referred to as a BBA
partner. An AAR filed by a BBA
partnership is referred to as a BBA AAR
and must be filed by the PR.
Partnership representative (PR). If the
partnership is subject to the centralized
partnership audit regime, section 6223
provides that the partnership must
designate a partner or other person with a
substantial presence in the United States
as the PR who shall have the sole
authority to act on behalf of the
partnership. If the designated PR is an
entity, the partnership must also appoint a
designated individual to act on behalf of
the entity PR. All partners and the
partnership are bound by the actions of
the PR in dealings with the IRS.
NonBBA partnership. Under the BBA,
certain partnerships with 100 or fewer
eligible partners for the tax year can elect
out of the centralized partnership audit
regime. Additional details regarding the
election out of the centralized partnership
audit regime can be found in the 2018
Instructions for Form 1065. A partnership
that elects out of the centralized
partnership audit regime will be referred to
as a nonBBA partnership.
Partnership-related items. Under
section 6241(2)(B), a partnership-related
item is any item or amount with respect to
the partnership that is relevant in
determining the income tax liability of any
person, without regard to whether the item
or amount appears on the partnership's
return and including an IU and an item or
amount relating to any transaction with,
basis in, or liability of, the partnership.
Reviewed year pass-through partner.
For purposes of these instructions, under
the BBA, a reviewed year pass-through
partner is a pass-through entity who held
an interest in a BBA partnership at any
time during the reviewed year, which is the
partnership tax year to which the
Instructions for Form 1065X

partnership adjustment relates. For
example, if the BBA AAR is filed to make
an adjustment to income for the 2018 tax
year, 2018 is the reviewed year.
Tax matters partner (TMP). If the
partnership is subject to the TEFRA
procedures, it can designate a partner as
the TMP for the tax year for which the
return is filed. The TMP is a general
partner (in most cases, the TMP must also
be a U.S. person) designated by the
partnership to represent the partnership in
TEFRA proceedings. The designation is
made by completing the Designation of
Tax Matters Partner section on page 3 of
Form 1065 for tax years beginning before
2018.
Additionally, a REMIC may designate a
tax matters person in the same manner in
which a partnership may designate a TMP
under Regulations section 301.6231(a)
(7)-1. When applying that section, treat all
holders of a residual interest in the REMIC
as general partners. The designation may
be made by completing the Designation of
Tax Matters Person section on page 3 of
Form 1066 for tax years beginning before
2018.
For an LLC, a member of the LLC is
treated as a partner and a
member-manager is treated as a general
partner. A member-manager is any owner
of an interest in the LLC who, alone or
together with others, has continuing
exclusive authority to make the
management decisions necessary to
conduct the business for which the LLC
was formed. If there are no elected or
designated member-managers, each
owner is treated as a member-manager.
For details, see Regulations section
301.6231(a)(7)-2.
Partner with authority (PWA). Each
ELP must designate a partner (or other
person) as the PWA who shall have the
sole authority to act on behalf of the
partnership. See section 6255(b)(1) (prior
to amendment by BBA). If the partnership
fails to designate a PWA, the IRS can
select any partner to serve as the partner
with such authority. The PWA has the
authority to file an AAR on behalf of the
partnership. The PWA does this by filing
Form 1065X.

Paid Preparer's
Information

If a partner or an employee of the
partnership or REMIC completes Form
1065X, the “Paid Preparer Use Only”
space should remain blank. In addition,
anyone who prepares Form 1065X but
does not charge the partnership or REMIC
should not complete this section.
Generally, anyone who is paid to
prepare Form 1065X must do the
following.
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• Sign the return in the space provided
for the preparer's signature.
• Fill in the other blanks in the “Paid
Preparer Use Only” area of the return. A
paid preparer cannot use a social security
number in the “Paid Preparer Use Only”
box. The paid preparer must use a
preparer tax identification number (PTIN).
• Give the partnership or REMIC a copy
of the return in addition to the copy to be
filed with the IRS.
Note. A paid preparer may sign original or
amended returns by rubber stamp,
mechanical device, or computer software
program.

Interest and Penalties
Interest. Generally, interest is charged on
taxes not paid by the due date, even if an
extension of time to file is granted. Interest
is also charged on penalties imposed for
negligence, fraud, substantial valuation
misstatements, substantial
understatements of tax, and reportable
transaction understatements. The interest
is charged from the due date (including
extensions) to the date of payment. The
interest charge is figured at a rate
determined under section 6621.
Late payment penalty. The penalty for
not paying the tax when due is usually 1/2
of 1% of the unpaid tax for each month or
part of a month that the tax remains
unpaid. The penalty cannot exceed 25%
of the unpaid tax.
Other penalties. Penalties can also be
imposed for negligence, substantial
understatements of tax, reportable
transaction understatements, and fraud.
See sections 6662, 6662A, and 6663.
Interest and penalties applicable to imputed underpayment (IU). Except when
the partnership elects to have the partners
take into account the adjustments, BBA
partnership reviewed year interest and
penalties are the following.
• The interest figured with respect to any
IU is the interest which would be
determined under chapter 67 for the
period beginning on the day after the
return due date for the reviewed year and
ending on the return due date for the
adjustment year as defined under section
6225(d)(2) or, if earlier, the date the IU is
paid.
• Any penalty, addition to tax, or
additional amount shall be determined at
the partnership level as if such BBA
partnership had been an individual subject
to tax under chapter 1 for the reviewed
year and the IU were an actual
underpayment (for understatement) for
such year for purposes of part II of
subchapter A or chapter 68.
Election to apply the alternative to
payment of the IU. If a BBA partnership

elects the alternative to payment of the IU
under sections 6227(b)(2) and 6226(c),
interest shall be determined:
• At the partner level;
• From the due date of the return for the
tax year to which the increase is
attributable (determined by taking into
account any increases attributable to a
change in tax attributes for a tax year
under section 6226(b)(2)), until the date of
payment; and
• At the section 6621(a)(2)
underpayment rate.

Protective TEFRA AARs

Generally, a protective AAR is a request
for credit or refund based on current
litigation or expected changes in tax law or
other legislation. The TMP or PWA files a
protective AAR when the right to a refund
is contingent on future events and may not
be determinable until after the period for
filing an AAR has expired. Protective
AARs are subject to AAR statutes set forth
in sections 6227, 6228, and 6229 (prior to
amendment by BBA). If you are a TMP
filing on behalf of the partnership, the
petition period described in section 6228
(prior to amendment by BBA) can be
extended by using Form 9248, Agreement
to Extend the Time to File a Petition for
Adjustment by the Tax Matters Partner
With Respect to Partnership Items.
A protective AAR must clearly state
that it is a protective AAR, alert the IRS to
the essential nature of the adjustment, and
specify the line item to be protected.
Judicial review of an AAR (for returns
subject to the TEFRA procedures or
ELPs). If the IRS fails to act on an AAR,
the TMP or PWA may file a petition for
judicial review with the U.S. Tax Court,
U.S. Court of Federal Claims, or U.S.
District Court. The TMP or PWA must file
the petition before the date that is 2 years
after the date the TMP or PWA filed the
AAR, but not until after the date that is 6
months from the date of such filing. The
2-year period may be extended if the IRS
and the TMP or PWA agree in writing. For
more details, see sections 6228 and 6252
(prior to amendment by BBA).

Specific Instructions
Name and Address

Print or type the legal name of the entity,
address, and EIN on the appropriate lines.
Include the suite, room, or other unit
number after the street address. If the
Post Office does not deliver mail to the
street address and the entity has a P.O.
box, show the box number instead.
If the entity receives its mail in care of a
third party (such as an accountant or
attorney), enter on the street address line
“C/O” followed by the third party's name
and street address or P.O. box.

If the entity's address is outside the
United States, or its possessions or
territories, enter the information on the line
for “City or town, state, and ZIP code” in
the following order: city, province or state,
and foreign country. Follow the foreign
country's practice in placing the postal
code in the address. Do not abbreviate the
country name.

Part I. Check the Appropriate
Box

Partnership-partner amended
return related to modification of
another partnership’s IU. If a partner
that is itself a partnership
(partnership-partner) is filing an amended
return as part of modification of the IU
under section 6225(c)(2), check this box.

Section 1—TEFRA/NonTEFRA
Determination
Item A

In 2018, an AAR can be filed by a
partnership subject to TEFRA
proceedings (TEFRA AAR), a partnership
subject to BBA proceedings (BBA AAR),
An electing large partnership (ELP), and a
REMIC.

If the answer to item A is “Yes,” the
partnership return is not subject to the
TEFRA proceedings. You should proceed
to item E and check the “Not subject to
TEFRA” box.

For partnership tax years beginning
before January 1, 2018 (unless electing into BBA).

These items are used to determine if the
partnership is subject to the rules for
consolidated audit procedures (TEFRA
procedures).

TEFRA AAR. The consolidated audit
proceedings of sections 6221 through
6234 (prior to amendment by BBA) are
referred to as TEFRA proceedings and
partnerships that are subject to TEFRA
proceedings are referred to as “TEFRA
partnerships.” An AAR filed by the TMP of
the TEFRA partnership is a TEFRA AAR.
Any partner in a TEFRA partnership can
also file an AAR using Form 8082. TEFRA
proceedings will not apply to partnerships
with tax years beginning after 2017. A
partnership with a tax year beginning
before 2018 that is not subject to TEFRA
proceedings is referred to as a
“nonTEFRA partnership.”
ELP AAR. The ELP procedures were
repealed for tax years beginning after
2017. However, ELPs filing a non-efiled
AAR in 2018 for a tax year that began
before 2018 will still use the 2018 revision
of Form 1065X.
For partnership tax years beginning
after 2017 and partnerships electing
into BBA for tax years beginning after
November 2, 2015, and before 2018.
BBA AAR. All partnerships with tax
years beginning after 2017 are subject to
the centralized partnership regime unless
an eligible partnership makes a valid
election under section 6221(b) to elect out
of the centralized partnership audit
regime. Partnerships electing into BBA for
tax years beginning after November 2,
2015, and before January 1, 2018, are
also subject to the centralized partnership
audit regime. Partnerships that are subject
to the centralized partnership audit
procedures of sections 6221 through 6241
will be referred to as “BBA partnerships.”
A partnership with a tax year beginning
after 2017 that is not subject to BBA
proceedings because it has made a valid
election under section 6221(b) is a
nonBBA partnership. An AAR filed by a
BBA partnership is a BBA AAR.
-4-

Items B Through E

Consolidated REMIC proceedings.
Generally, the tax treatment of REMIC
items is determined at the REMIC level in
a consolidated REMIC proceeding, rather
than in separate proceedings with
individual residual interest holders. A
REMIC subject to consolidated REMIC
procedures will have checked the box on
item G on page 3 of its original Form 1066.

Items B and C

All partnerships with tax years beginning
before 2018 (except ELPs) and REMICs
ARE subject to TEFRA partnership audit
procedures unless the partnership or
REMIC is subject to the small partnership
exception. See section 6231(a)(1)(B)
(prior to amendment by BBA).
A small partnership is a partnership
with 10 or fewer partners at all times
during the year. All partners must be U.S.
individuals and their estates, resident alien
individuals, or C corporations. If both
these conditions are met, check the “Yes”
box for item B and item C.
Note. For making the small partnership
determination, a husband and wife each
having their own partnership interest are
considered one partner. An individual who
has passed away during the year and their
estate are considered one partner.

Item D

A partnership defined as a small
partnership can elect to be treated as a
TEFRA partnership for tax years
beginning before 2018. The partnership
elects TEFRA treatment by attaching a
statement to the tax return for the first year
they wish the election to be effective. This
statement must be signed by all partners.
See Regulations section 301.6231(a)
(1)-1(b). Form 8893, Election of
Partnership Level Tax Treatment, is the
statement that can be used to make this
Instructions for Form 1065X

election. If you answer “Yes” to item D,
also enter the tax year of the filing of this
election in the space provided.

Item E

If, at any time during the tax year, there
are more than 10 partners or any of the
following are partners in the partnership,
then the partnership is not a small
partnership.
• Another partnership.
• An LLC which files as a partnership or
is treated as a disregarded entity.
• Any type of trust, including a grantor
trust.
• A nominee.
• A nonresident alien.
• An S corporation.
IF in item...

The box
checked
is...

THEN in item E,
check...

B

No

Subject to TEFRA.

C

No

Subject to TEFRA.

D

Yes

Subject to TEFRA.

B and C

Yes

Not subject to TEFRA.

D

No

Not subject to TEFRA.

Item F

Check the box to indicate whether you are
filing an amended return or an AAR.

Amended Return. Check this box if you
checked the “Not subject to TEFRA” box
in item E, and you are not an ELP. This
means that you are filing a request to
correct a previously filed nonTEFRA
partnership return or REMIC return.
If your partnership or REMIC return
meets the exception under section
860F(e) or section 6231 (prior to
amendment by BBA), and does not file an
election to be treated as a TEFRA
partnership under section 6231(a)(1)(B)(ii)
(prior to amendment by BBA), and you
received a corrected Form 1099 or are
making changes to income, deductions, or
credits, but there are no flow-through
changes from a TEFRA partnership, then
you are filing an amended return. Check
the “Amended Return” box.
Administrative Adjustment Request
(AAR). Check this box if you are filing a
request to correct a previously filed
partnership or REMIC return and you are
one of the following.
• The TMP of the TEFRA partnership or
REMIC. The REMIC must be subject to
consolidated REMIC proceedings. For
more information on consolidated REMIC
proceedings, see the Instructions for Form
1066.
• An ELP correcting a previously filed
return.

Instructions for Form 1065X

Item G

A substituted return is an amended return
in which the TMP of the TEFRA
partnership requests that the treatment of
an item shown on the AAR be substituted
for the treatment of the item on the
pass-through entity's return. If the IRS
allows substituted return treatment, the
changes shown on the amended return
will be treated as corrections of
mathematical or clerical errors, and the
IRS may credit or refund any overpayment
of tax to the partners or residual interest
holders based on the amended return or
assess any resulting tax without a
deficiency or entity level proceeding. See
section 6227(c)(1) (prior to amendment by
BBA).
If the request is not treated as a
substituted return, the IRS may credit or
refund any overpayment of tax to the
partners or residual interest holders per
the request, conduct an examination of the
pass-through entity's return, or take no
action on the request. When a request is
not treated as a substituted return, the IRS
cannot assess tax without a deficiency or
entity level proceeding. See section
6227(c)(2) (prior to amendment by BBA).

ELPs. An ELP cannot request substituted
treatment. See section 6251(b) (prior to
amendment by BBA).

Section 2—BBA AAR
Item A

If the "Yes" box is checked, complete
Form 8979 and attach it to the AAR. See
the Instructions for Form 8979.

Item B

BBA partnerships filing an AAR will need
to determine if the partnership
adjustments result in an IU. The BBA
partnership should consider all available
guidance issued by the IRS in making a
determination of whether or not the AAR
results in an IU.

Item C

If the adjustments contained in the BBA
AAR result in an IU, then the partnership
must pay the IU at the time that the AAR is
filed. However, under section 6227(b)(2),
the partnership can elect to have its
reviewed year partners take the
adjustments into account. This election is
an alternative to payment of the IU. See
section 6226(a)(2) for details. If the
partners take the adjustments into
account, the partnership is no longer liable
for the IU. If the adjustments contained in
the BBA AAR do not result in an IU, the
partnership must follow the rules for the
reviewed year partners to take into
account the adjustments. If the
adjustments do not result in an IU or the
BBA partnership makes a valid election
under section 6227(b)(2), the partnership
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must furnish a statement to each reviewed
year partner that identifies the partner’s
share of any adjustment to a
partnership-related item included in the
BBA AAR. A copy of the statements
furnished to the reviewed year partners
must also be filed with the IRS.
If making this election, the BBA
partnership that is filing an AAR should
consider all available guidance issued by
the IRS to ensure that the statement
provided to the partners and to the IRS is
complete.

Item D

Each reviewed year partner is required to
take into account its share of adjustments
requested in a BBA AAR if the partnership
adjustments result in an IU and the
partnership makes the election discussed
under Item C. Additionally, each reviewed
year partner is required to take into
account its share of any adjustments
requested in a BBA AAR that do not result
in an IU. The determination of whether or
not an adjustment results in an IU amount
is discussed in Item B for this section.
The partnership is required to furnish
the reviewed year partner with a statement
of its share of the BBA AAR adjustments.
The statement signed by the partnership
representative attesting to the
partnership's compliance with this
requirement is included under Item D for
this section. The BBA partnership should
consider all available guidance issued by
the IRS to ensure that the statement
provided to the partners and to the IRS is
complete.

Special instructions for reviewed year
pass-through partners that receive a
statement related to an AAR. A
reviewed year pass-through partner that
receives a statement from a BBA AAR
partnership (directly or indirectly) can
choose to make a payment or furnish
statements to its partners. If making a
payment, the pass-through partner should
use the adjustments shown on the
statement it received to figure an IU using
procedures the BBA partnership uses to
figure an IU under section 6225. The
pass-through partner should include a
detailed payment calculation, a copy of
the AAR statement it received, and a
check or an electronic confirmation
number. Information to include on the
payment is the name of the partnership,
“Form 1065,” the taxpayer identification
number of the partnership, the tax year,
and “BBA AAR Push Out.” Checks must
be payable to the “United States
Treasury.” If making an electronic
payment, choose the payment description
“BBA AAR Push Out” from the list of
payment types. The payment should also
include any applicable interest or
penalties. See Interest and Penalties,
earlier.

If the partnership is electing to account
for the adjustments by furnishing
statements to its partners, the
pass-through partner must provide
statements to each partner by the
extended due date of the BBA AAR
partnership's return for the year the AAR
was filed (“the extended due date”).
Reviewed year pass-through partners
must also file a partnership adjustment
tracking report that includes the
information required by the Secretary with
the IRS prior to the extended due date.
The reviewed year pass-through partner
should consider all available guidance
issued by the IRS to ensure that the
statements provided to the partners and to
the IRS are complete.

in Section 3 of Form 1065X the name,
EIN, reviewed year, and audit control
number of the BBA partnership under
examination. In addition, if a
partnership-partner is choosing to pay an
IU with respect to their allocable share of
adjustments, see Part IV—Imputed
Underpayment Under the Centralized
Partnership Audit Regime, for payment
instructions.

Note. Pass-through partner adjustments
that do not result in an IU are taken into
account by the pass-through partner in the
tax year of the pass-through partner that
includes the date the required payment is
made, or if no payment is required, the
date the statement described is furnished
to the pass-through partner.

For information on income, deductions,
credits, etc., see the instructions for Form
1065, Schedules K and K-1, for the tax
year being amended or otherwise
adjusted. See the Instructions for Form
1065 for a list of forms that may be
required.

Item E

Under section 6227(b)(1), the partnership
may modify the IU resulting from
adjustments reported in a BBA AAR in
accordance with the provisions under
section 6225(c), disregarding the
provisions under paragraphs (2), (7), and
(9). Any modification made to the IU under
section 6227(b)(1) must be disclosed and
fully explained in documentation included
with the AAR. The BBA partnership should
consider all available guidance issued by
the IRS in making a determination that a
modification to the IU applies.
Note. If the partnership chooses the
alternative to payment procedures, the
modifications to the IU are disregarded
and are not included on the statements
provided to the partners.

Section 3—Partnership-Partner
Amended Return Filed as Part
of Modification of the Imputed
Underpayment (IU) During an
Examination

Part II—Amended or
Administrative Adjustment
Request (AAR) Items for
Partnerships Filing Form
1065 Only (ELPs and
REMICs Use Part III)

If you are a TEFRA partnership, the
IRS will process Form 1065X following the
guidelines set forth in sections 6227(c)(1)
and 6227(c)(2) (prior to amendment by
BBA).
Column (a). Enter the amounts from
Schedule K of Form 1065 as originally
filed or as was previously adjusted. If the
return was changed or audited by the IRS,
enter the amounts as adjusted.
Column (b). Enter the net increase or
decrease for each line being changed.
Use parentheses around all amounts that
are decreases. Explain the increase or
decrease in Part V.
Line 3. Use line 3 to show amendments
to other net rental income (loss). For more
information on how other net rental
income (loss) is figured, see Line 3. Other
Net Rental Income (Loss) in the
Instructions for Form 1065 for the tax year
being amended or otherwise adjusted.
If the partnership is reporting more than
one rental activity, show the separate
calculation for each activity in Part V.

Section 6225(c)(2) allows a BBA
partnership under examination to request
specific types of modifications of an IU
proposed by the IRS. One type of
modification applies when a partner or
indirect partner, including
partnership-partners, file an amended
return for the tax year of the partner which
includes the end of the reviewed year of
the BBA partnership under examination.

Line 9c. For more information on the
three types of unrecaptured section 1250
gain that can be reported, see Line 9c.
Unrecaptured Section 1250 Gain in the
Instructions for Form 1065 for the tax year
being amended or otherwise adjusted.
If the partnership is reporting more than
one type of unrecaptured section 1250
gain, show the separate calculation for
each gain in Part V.

A BBA partnership under examination
will be assigned a unique audit control
number. A partnership-partner using a
Form 1065X as part of a modification of an
IU under section 6225(c)(2) must include

Line 11. Enter any other item of income
or loss not included in lines 1 through 10.
For information on the types of income
and loss reported, see Line 11. Other
Income (Loss) in the Instructions for Form
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1065 for the tax year being amended or
otherwise adjusted.
In Part V, identify the different types
and amounts of income and loss reported
on this line.
Line 13d. Enter deductions not included
on lines 12, 13a, 13b, 13c, and 16p. For
more information on the types of
deductions reported, see Line 13d. Other
Deductions in the Instructions for Form
1065 for the tax year being amended or
otherwise adjusted.
In Part V, identify the different types
and amounts of the deductions reported
on this line.
Line 15d. Enter credits (other than credits
reported on lines 15a through 15c) related
to rental real estate activities. These
credits may include any type of credit
listed in Line 15f. Other Credits of the
Instructions for Form 1065 for the tax year
being amended or otherwise adjusted.
In Part V, identify the different types
and amounts of the rental real estate
credits reported on this line.
Line 15e. Enter credits (other than credits
reported on lines 15a through 15d) related
to rental activities. These credits may
include any type of credit listed in Line 15f.
Other Credits of the Instructions for Form
1065 for the tax year being amended or
otherwise adjusted.
In Part V, identify the different types
and amounts of the rental credits reported
on this line.
Line 15f. Enter credits, except for credits
or expenditures shown or listed for lines
15a through 15e. If any of the credits are
attributable to rental activities, enter them
on line 15d or line 15e, as appropriate. For
more information on the types of credits
listed, see Line 15f. Other Credits in the
Instructions for Form 1065 for the tax year
being amended or otherwise adjusted.
In Part V, identify the different types
and amounts of credits reported on this
line. If any of the credits are subject to
recapture, include in Part V the credit
recapture information.
Line 16q. Use line 16q to show
amendments to total reduction in taxes
available for credit. For more information
about the reduction in taxes that are
reported, see Line 16q. Reduction in
Taxes Available for Credit (Code R) in the
Instructions for Form 1065 for the tax year
being amended or otherwise adjusted.
In Part V, identify the different types
and amounts of reductions reported on
this line.
Line 16r. Use Part V to report
amendments to other foreign tax
information. For more information about
the other foreign tax information
associated with this line, see Line 16r.
Instructions for Form 1065X

Other Foreign Tax Information in the
Instructions for Form 1065 for the tax year
being amended or otherwise adjusted.
Line 17f. Use line 17f to show
amendments to other alternative minimum
tax (AMT) items that are not shown on
lines 17a through 17e. For more
information about the other AMT items
associated with this line, see Line 17f.
Other AMT Items in the Instructions for
Form 1065 for the tax year being
amended or otherwise adjusted.
In Part V, identify the different types
and amounts of other AMT items reported
on this line.
Line 20c. Use Part V to report
amendments to other items and amounts.
For more information on other items and
amounts associated with this line, see
Line 20c. Other Items and Amounts in the
Instructions for Form 1065 for the tax year
being amended or otherwise adjusted.

Amended Schedules K-1

If a BBA partnership files an AAR and it
needs to make its partners aware of their
allocable share of adjustments, it will
furnish the partners a statement. These
statements are discussed under Part I,
Section 2, Item D, earlier. ELPs filing a
Form 1065X as an AAR should see Part
III, below. All other partnerships should file
amended Schedules K-1 with Form 1065X
and furnish copies of the amended
Schedules K-1 to the partners.
If a TEFRA partnership is filing Form
1065X for an AAR, it should inform the
partners receiving the amended
Schedules K-1 that the partnership is filing
the AAR. If the partnership is not subject
to either the rules for consolidated audit
proceedings (TEFRA proceedings) under
sections 6221 through 6234 (prior to
amendment by the BBA) or to the
centralized partnership audit regime under
BBA, it must furnish the amended
Schedules K-1 to its partners. The
partners must then file their own amended
returns.

adjustment is allowed, the partnership
must pay tax in an amount equal to the
excess amount.
2. It may elect not to pass the
adjustment through to current partners by
paying tax on any IU that results from the
adjustment. If the partnership elects to pay
the tax, enter it on Part III, line 16. Attach a
computation of the tax to Form 1065X.
In either case, the partnership is liable
for any interest and penalties on IUs that
result from the adjustment. See section
6242(b) (prior to amendment by BBA) for
details. Interest is figured on the IU for the
period beginning on the day after the due
date (excluding extensions) of the
partnership return for the tax year the
adjustment takes effect, or, if earlier, the
date the partnership paid the tax due
under (2) above. The adjusted year is the
partnership tax year in which the item
being adjusted arose.
ELPs and REMICs. Identify in Part III of
Form 1065X the amount and treatment of
any item the partnership or REMIC is
changing from the way it was reported on
the original return.
Column (a). Enter a description of the
item that the partnership or REMIC is
adjusting or amending.
Column (b). Enter the amounts from the
ELP's or REMIC's return as originally filed
or as it was later adjusted. If the return
was changed or audited by the IRS, enter
the amounts as adjusted.
Column (c). Enter the net increase or net
decrease for each line being changed.
Use parentheses around all amounts that
are decreases. Explain the increase or
decrease in Part V.
Column (d). Add the increase in column
(c) to the amount in column (b) or subtract
the column (c) decrease from column (b).
Enter the result in column (d).
Line 6. Show any increase or decrease to
the ELP's tax or other payments.
Line 10. Enter total tax as follows.

Part III—Amended or
Administrative Adjustment
Request (AAR) Items for
ELPs and REMICs

ELPs. Enter the line 6 amounts on
line 10.

ELPs only. An ELP may file an AAR to
adjust its partnership items. Generally, the
ELP has two choices for handling the
adjustment.
1. It may combine the adjustment with
the same partnership item for the year in
which the IRS allows the adjustment and
pass it through to the current partners for
that year. However, if the adjustment
involves the reduction in a credit which
exceeds the amount of that credit for the
partnership tax year in which the

Line 11. Enter the amount of tax
deposited with Form 7004, Application for
Automatic Extension of Time To File
Certain Business Income Tax, Information,
and Other Returns.

Instructions for Form 1065X

REMICs. Add the amounts on lines 7
through 9 and enter the total for each
column on line 10.

Line 14. Enter the amount from the
“Overpayment” line of the original return,
even if the ELP or REMIC chose to credit
all or part of this amount to the next year's
estimated tax. This amount must be
considered in preparing Form 1065X
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because any refund due from the original
return will be refunded separately from
any additional refund claimed on Form
1065X. If the original return was changed
by the IRS and the result was an
additional overpayment of tax, also
include that amount on line 14.
Line 16. If the ELP or REMIC does not
use electronic fund transfers, including the
Electronic Federal Tax Payment System
(EFTPS), enclose a check with this form.
Make the check payable to “United States
Treasury.”
Line 17. If the ELP or REMIC is entitled to
a refund larger than the amount claimed
on the original return, line 17 will show
only the additional amount of
overpayment. This additional amount will
be refunded separately from the amount
claimed on the original return. The IRS will
figure any interest due and include it in the
refund.

Amended Schedules K-1 or
Schedules Q

If the ELP or REMIC is filing Form 1065X
for an AAR, do not furnish the amended
Schedules K-1 or Schedules Q to the
partners or residual interest holders. If the
REMIC is not filing for an AAR and is not
subject to the rules for consolidated audit
proceedings under sections 6221 through
6231 (prior to amendment by BBA), the
REMIC must furnish the amended
Schedules Q to its residual interest
holders.

Part IV—Imputed
Underpayment (IU) Under
the Centralized
Partnership Audit Regime

BBA AARs that result in an IU as
determined under section 6225(b) should
include documentation with the AAR that
supports the computation of the IU
amount. The BBA partnership should
consider all available guidance issued by
the IRS when figuring the IU amount. The
IU amount should be reported on line 1 of
Part IV.
If modifications are applied to the IU,
complete and attach Form 8980 and
report the modified IU amount in Part IV,
line 1. See Part I, Section 2, item E,
earlier, for more information on
modification.
The BBA AAR should include
documentation that supports the
determination of penalties and interest
associated with the BBA AAR. A payment
made with Form 1065X should detail the
portion of the payment that is for the IU,
the portion that is for interest, and the
portion that is for penalties. The total of all
three should be reflected on line 2 of Part
IV.

Under section 6232(b), partnerships
filing a BBA AAR that have adjustments
that result in an IU, and do not elect the
alternative to payment of the IU, must pay
the IU, which should be shown on line 2 in
Part IV of Form 1065X at the time of filing
the AAR. Information to include on the
payment made by check is the name of
the partnership, “Form 1065,” the taxpayer
identification number of the partnership,
the tax year, and “BBA AAR Imputed
Underpayment.” Checks must be payable
to “United States Treasury ” and included
with the BBA AAR. If making an electronic
payment, choose the payment description
“BBA AAR Imputed Underpayment” from
the list of payment types. The payment
amount, including interest and penalties,
should be reported in Part IV, line 3.

Partnership-Partner Amended
Return Filed as Part of
Modification

Partnership-partners who are filing
amended returns as part of the
modification of the IU during examination
under section 6225(c)(2) will report the
applicable payment of tax in Part IV, line 1.
A payment made with Form 1065X should
detail the portion of the payment that is for
the payment of the IU and the portion that
is for interest and penalties. The
partnership should consider all available
guidance issued by the IRS when figuring
the amount due. The total of all three

should be reflected in Part IV, line 2. If the
payment is made by check, information to
include on the payment is the name of the
partnership-partner, “Form 1065,” the
taxpayer identification number of the
partnership-partner, tax year, and “Partner
Payment for BBA Modification.” Checks
must be payable to the“United States
Treasury” and included with the amended
return. If making an electronic payment,
choose the payment description “Partner
Pymnt for BBA Modification” from the list
of payment types. The payment amount,
including interest and penalties, should be
reported in Part IV, line 3.

Part V—Explanation of
Changes to Items in Part II
and Part III
For each amended item, explain in detail
the reasons for the change. Include any
computations necessary to support the
amended item.

Changes in allocations. If there is a
change in the allocation of income, gain,
loss, deduction, or credit to a partner,
check the box in Part V and specify the
nature and reasons for the changes.
Paperwork Reduction Act Notice. We
ask for the information on this form to carry
out the Internal Revenue laws of the
United States. You are required to give us
the information. We need it to ensure that

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you are complying with these laws and to
allow us to figure and collect the right
amount of tax.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating
to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally, tax
returns and return information are
confidential, as required by section 6103.
The time needed to complete and file
this form will vary depending on individual
circumstances. The estimated burden for
business taxpayers filing this form is
approved under OMB control number
1545-0123 and is included in the
estimates shown in the instructions for
their business income tax return.
If you have suggestions for making this
form simpler, we would be happy to hear
from you. You can send us comments
from IRS.gov/FormComments. Or you can
write to: Internal Revenue Service, Tax
Forms and Publications Division, 1111
Constitution Ave. NW, IR-6526,
Washington, DC 20224. Do not send
Form 1065X to this address. Instead, see
Where To File, earlier, near the beginning
of the instructions.

Instructions for Form 1065X