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include the proportionate share (direct or indirect) of the partnership’s threshold amounts based upon the corporate partner’s interest in the partnership to determine if the reporting threshold is

met.

The corporate partner will then determine if the position requires disclosure.

corporation’s determination of whether disclosure is necessary would take offsetting amounts at the corporate level that would offset the amount reported.

into

account

The any

With respect to disregarded entities, and generally consistent with the treatment of these entities for federal tax purposes, the entities should be included with the corporate owner and any uncertain position of the entity should be reported by the corporation.

Rather than expanding upon the number of entities reporting to the government, a partnership related to a corporation as defined within section 707(b) should report to the affected partner the gross amount of the uncertain position attributable to that partner’s interest in the uncertain position along with a description consistent with that called for in the announcement. The partnership should likewise report to the corporate partner its proportionate share of the partnership’s threshold amounts based upon the corporate partner’s interest in the partnership. The corporate partner will then determine if the position requires disclosure. The corporation’s determination of whether disclosure is necessary would take into account any offsetting amounts at the corporate level that would offset the amount reported.

The announcement should be modified such that it is clearly understood that the schedule only requires the disclosure of uncertain tax positions directly related to U.S. federal tax liabilities. In the scope paragraph of the announcement, the Service uses the phrase “...relating to uncertain tax positions involving United States federal income tax.” (Emphasis added.) However, in other comments the announcement states that a taxpayer will have to “provide information about their uncertain tax positions that affect their United States federal income tax liability.” (Emphasis added.) Uncertain tax positions can relate to international and state income tax matters. These transactions or positions could “affect” a taxpayer’s federal income tax liability. The announcement should clearly state that it applies only to those positions that directly involve federal income tax.

The announcement states that the schedule will require the reporting of uncertain tax positions beyond those for which a reserve is required under FIN 48 or other accounting standards. An example is provided related to litigation of a position. The scope should be modified to exclude positions for which the taxpayer clearly has the intention of litigating. Disclosures in this category would potentially reveal the taxpayer’s risk and litigation analysis which is inconsistent with the Service’s stated policy of restraint.

Question 5 triggers another modification that we believe is warranted. The scope of the disclosure regime should not include any position for which the IRS has a general administrative practice of not examining a position (e.g., expensing of low-cost assets). To require reporting of

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