More proposed guidance has emerged on the comprehensive partnership audit regime (CPAR) that was enacted as part of the 2015 Bipartisan Budget Agreement. CPAR is effective for tax years beginning after December 31, 2018, replacing the prior TEFRA consolidated audit regime with an even more centralized system. The new guidance, found at REG-118067-17, provide information on the attribute adjustments to be made following a CPAR examination of the partnership.

Under CPAR by default at the conclusion of a partnership exam, the IRS issues a bill for tax due, referred to as an “imputed underpayment,” to the partnership which pays the amount. The imputed underpayment is initially calculated by applying the maximum individual tax rate (37% for 2018) to the net adjustment of the partnership, though the partnership has various options to adjust the payment amount down to lower rates and/or remove portions of the adjustment from the imputed adjustment entirely.