A Complete Misinterpretation of the “Small Partnership” Exception

The “small partnership” exception, enacted in 1982 as part of TEFRA,1 has been criticized in the past, mostly by the Joint Committee on Taxation, but never as irresponsibly as the recent release by the Office of Chief Counsel of the Internal Revenue Service, dated July 12, 2017 and released August 18, 2017.2 The author (or authors) write as though they had never read I.R.C. § 6231(a)(1)(B) of the Internal Revenue Code. The criticism comes less than six months before the “small partnership” exception is scheduled to be history unless an aggressive effort to save the highly important concept before the end of this year is achieved with the Congress (it is pending as HR 3508)