3.11.15. Return of Partnership Income

(1) The purpose of Document Perfection is to code and edit (perfect) returns and other documents for input to the Master File (MF) through the Integrated Submission and Remittance Processing System (ISRP) or the Service Center Recognition Image Processing System (SCRIPS). In addition, Document Perfection forwards any other documents or attachments not related to the processing of the returns to the function responsible for handling them.

(2) It is not the purpose of Code and Edit to mathematically verify or to check the validity of the returns and other documents being processed unless otherwise specified in the applicable section. The computer and/or Error Correction Resolution (ERS) will perform these functions if the returns and other documents are coded and edited as prescribed in the applicable subsections of this section.

(1) Authority for these procedures is found in the following sections of the Internal Revenue Code and their corresponding Treasury regulations:

• IRC 6031(a)

(2) All Policy Statements for Submission Processing are found in IRM 1.2.1, Servicewide Policies and Authorities, Servicewide Policy Statements.

(1) The Campus Director is responsible for monitoring operational performance for their campus.

(2) The Operations Manager is responsible for monitoring operational performance for their operation.

(3) The Team Manager/Lead is responsible for performance monitoring and ensuring employees have the tools to perform their duties.

(4) The Team Employees are responsible to follow the instructions found in this IRM and maintain updated IRM procedures.

(1) Program Reports: The Batch/Block Tracking System (BBTS) stores a vast amount of data which can be used in performance monitoring and production projections.

(2) Program Effectiveness: The program goals are measured using the following methods:

• Embedded Quality Submission Processing (EQSP)

• Balanced Measures

• Managerial reviews

(1) Quality Review conducts a statistical valid sample size review of completed work to ensure IRM guidelines are followed.

(1) For Terms, Definitions and Acronyms, See Exhibit 3.11.15-1, Terms/Definitions/Acronyms

(1) The following is a list of related resources:

• Servicewide Electronic Research Program (SERP)

• Submission Processing Design Center (SPDC)

• Integrated Data Retrieval System (IDRS)

(1) This IRM can’t address every possibility that occurs while perfecting returns or documents. Take taxpayer intent into consideration. Refer issues not addressed in this IRM to the subject matter expert (SME), lead or manager to determine the corrective action.

(2) The following general information can be used when editing Form 1065 returns.

(3) General instructions eliminate repetition of the same instructions for each return. If the general instructions and the specific instructions conflict, follow the specific instructions.

(4) All money amounts must be edited in dollars only.

(5) Do not edit brackets or parentheses around amounts clearly shown to be negative by the presence of a minus sign (−).

(6) Reference is made throughout this IRM to "significant entries". A significant entry is defined as any amount other than zero.

(7) Instructions for editing Schedules K-1 are in IRM 3.0.101, General - Schedule K-1 Processing.

(8) Received Date is edited in MMDDYY format.

(9) If a current year (2024) return or a prior year return is filed on a tax form for other than the current tax year revision, convert the tax return to the current year format using the prior year conversion charts found in job aid (Number 2505-002).

(1) Document Perfection is responsible for arranging the return in the following sequence order when transcription line entries are present:

1. Form 1065, page 1

2. Form 1065, page 2

3. Form 1065, page 3

4. Form 1065, page 4

5. Form 1065, page 5

6. Form 1065, page 6

7. Schedule F (Form 1040), Profit or Loss From Farming

8. Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation

9. Schedule D (Form 1065), Capital Gains and Losses

10. Form 4797, Sales of Business Property

11. Form 8949, Sales and Other Dispositions of Capital Assets

12. Form 8996, Qualified Opportunity Fund

13. Form 1125-A, Cost of Goods Sold

14. Form 8913, Credit For Federal Telephone Excise Tax Paid

    Note: This Form was used for tax periods 200612 to 200711.

15. Form 8941, Credit For Small Employer Health Insurance Premiums

16. Form 3800, General Business Credit

17. Form 5884-B, New Hire Retention Credit

18. Form 6252, Installment Sale Income

19. Form 8997, Initial and Annual Statement of Qualified Opportunity Fund (QOF) Investments

20. Form 8936 Schedule A, Clean Vehicle Credit Amount

21. Form 4255, Certain Credit Recapture, Excessive Payments, and Penalties

22. Place all Schedules K-1(Form 1065), filed as attachments to Form 1065, as the last attachment in the package or follow local agreement. Detach current year (TY2024), two preceding years (TY2023 and TY2022) and future Schedules K-1. See IRM 3.0.101, for Schedule K-1 editing procedures.

23. Form 8938, Statement of Specified Foreign Financial Assets - Sequence Form 8938 to the back of the last page of Form 1065 (after schedules and attachment pages), attaching the Form 8938 so that it is back- to- back with the parent return.

(2) If a current year (2024) return or a prior year return is filed on a tax form for other than the current tax year revision, convert the tax return to the current year format using the prior year conversion charts found in job aid (Number 2505-002).

(1) The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Code and Edit (C&E) processing IRMs.

(2) Ogden, Kansas City, and Return Processing Branch, BMF Code and Edit and Error Resolution System (ERS) identified and developed topics for BMF Consistency.

(3) A ♦ (diamond) before and after the subsection title shows BMF consistency subsections.

(4) Text in normal print is the common processes for BMF returns. Text in BOLD print is form specific and applies to this IRM only.

(1) Edit marks are edited on the return for transcription to the Automated Data Processing (ADP) System through the Integrated Submission and Remittance Processing (ISRP) system. Enter edit marks in brown, red, orange, purple, or green pencil or pen.

(2) Only edit items on the return that are for transcription except where specific instructions require editing of a non-transcribed item. Leave lines blank if the entry would be a zero amount unless otherwise instructed.

(3) Do not obliterate, alter, or erase the original entry on a return when deleting or correcting an entry. Always exercise care to ensure that the original entry remains legible. Perfected entries give a legible "edit trail" for anyone who may work with the return later.

(4) Do not re-edit marks entered by other areas, such as Collections, Entity or Accounts Management, except to place the marks in the correct area or perfect for legibility.

(5) Photocopied Returns - Re-edit or underline any valid, black edit marks. See IRM 3.11.15.3.1.2, Correspondence Imaging Inventory (CII) Returns, and IRM 3.11.15.5.5, Re-Entry Document Procedures.

(6) For a description of specific edit marks, See the table below:

(1) Action Codes are used to show whether correspondence, research or some other action is needed. The Action Code sets the suspense period for the return and places the return in the workable or unworkable suspense inventory.

(2) When necessary, assign a three-digit Action Code.

(3) Edit the Action Code in the bottom left margin of the return.

(4) Assign Action Codes in the following priority:

1. Action Code 310 (Statute Control)

2. Action Code 320 (Entity Control)

3. Action Code 4XX

4. Action Code 6XX

5. Action Code 3XX

6. Action Code 2XX (Correspondence)

(5) Use the following table if more than one Action Code is needed:

(6) Edit the following Action Codes when a return can’t be perfected:

(7) Continue perfecting the return after editing the Action Codes.

(8) Valid Action Codes are listed below:

(9) IMPORTANT (regarding "Black Liquor" Claims on Form 1065 returns): This special processing only applies to Tax Years 200901 through 201011. DO NOT edit Action Code 343 (Other Accounting) on any Form 1065 for Tax Period 201012 or later.

(10) For more information and applicable Action Codes, See IRM 3.12.38.3.4, Error Resolution System (ERS) Action Codes, and the exhibit in IRM 3.12.38-1, Action Codes.

(1) The Internal Revenue Service (IRS) Restructuring and Reform Act of 1998 (RRA 98), Section 3705(a), gives identification requirements for all IRS employees working tax related matters.

(2) All IRS employees who communicate by telephone, face-to-face, or any other method of correspondence with taxpayers or their personal representatives on tax-related matters must give (at a minimum) the following information:

1. Telephone Contact - Their title (e.g., Mr., Mrs., Ms., Miss), last name, and badge identification (ID Card) number. Toll-free employees may also give their location for identification purposes. Treat faxes to taxpayers on tax-related matters as correspondence and include the required information.

2. Face-to-Face Contact - Their title (e.g., Mr., Mrs., Ms., Miss), give as appropriate during the conversation, their last name, and badge identification (ID Card) number.

3. Correspondence (sent to the taxpayer and authorized representatives) - A telephone number that taxpayers can call for answers to questions. In addition, manually generated correspondence must have the employee’s title (e.g., Mr., Mrs., Ms., Miss), last name, and Integrated Data Retrieval System (IDRS) number, and letter system number, which are systemically generated by IDRS. Treat faxes to taxpayers on tax-related matters as correspondence and include the required information.

4. Correspondex letters - Specific employee name and telephone number if the employee initiating the correspondence is in the best position to respond to any questions the taxpayer may have or if the taxpayer is being asked to give more case-related information. If the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number and standard signature.

(3) When a taxpayer requests to speak with a specific employee who previously worked their inquiry or request, or complains about the level of service previously given, make every attempt to resolve the taxpayer’s inquiry. If unable to resolve the issue, refer the inquiry using established procedures to the manager,

(4) Secretaries, receptionists, or other people who answer the telephone in functional offices need to identify themselves. They must provide their badge identification (ID Card) number only if they are answering telephones which are routinely used to give tax or account information.

(5) It is not necessary to repeat the badge identification (ID Card) number on a subsequent contact, when the nature of an employee’s work involves multiple contacts with the same taxpayer and the employee has given the taxpayer (either by telephone or in-person) their badge identification (ID Card) number on the first contact.

(1) Submit IRM deviations in writing following instructions from IRM 1.11.2.2.3, When Procedures Deviate from the IRM, and elevate through proper channels for executive approval.

(1) The Taxpayer Advocate Service is an independent organization within the Internal Revenue Service (IRS), led by the National Taxpayer Advocate, that helps taxpayers and protects taxpayer rights. TAS offers free help to taxpayers when a tax problem is causing a financial difficulty, when they’ve tried and been unable to resolve their issue with the IRS, or when they believe an IRS system, process, or procedure just isn't working as it should. TAS strives to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights. TAS has at least one taxpayer advocate office located in every state, the District of Columbia, and Puerto Rico.

(2) TAS uses Form 12412, Operations Assistance Request (OAR), to start the OAR process of referring a case to the Taxpayer Services (TS) Division, to affect the resolution of the taxpayer’s problem. For more information, refer to IRM 13.1.19, Taxpayer Advocate Service, Taxpayer Advocate Case Procedures, Advocating With Operations Assistance Requests (OARs).

(3) Refer taxpayers to TAS when the contact meets TAS criteria or when Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), is attached and steps can’t be taken to resolve the taxpayer's issue the same day.

(4) The definition of "same day resolution" is within 24 hours. The following two situations meet the definition of "same day resolution":

• The issue can be resolved within 24 hours;

• The IRS takes steps within 24 hours to resolve the taxpayer’s issue.

(5) When making a TAS referral, use Form 911, and forward to TAS following your local procedures.

(6) See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, for more information.

(1) For returns completed in other than U.S. currency, process as filed. However, if corresponding for missing/incomplete item(s), include instructions in the letter to resubmit in U.S. currency.

(1) Correspondence is all written communications from a taxpayer or their representative, excluding tax returns, whether solicited or unsolicited. This includes:

1. Written communications in response to IRS requests for information or data.

2. Written communications, including annotated notice responses, which give more information or dispute a notice.

3. A telephone call that results in a written referral or research (Form 4442, Inquiry Referral).

(2) The key to identifying taxpayer correspondence is to ask the following questions:

1. Is taxpayer waiting for a response from IRS?

2. Is taxpayer waiting for IRS to take action?

3. Is taxpayer asking a question?

(1) Ogden Submission Processing Center (OSPC) will process all Foreign Address returns.

(2) A Foreign Address is any address other than the 50 states and the District of Columbia.

(3) An Army Post Office (APO), Diplomatic Post Office (DPO) or Fleet Post Office (FPO) is not considered a foreign address. The Postal Service established new address requirements for the APO/DPO/FPO addresses.

(4) If an address appears in the old APO/DPO/FPO format, convert to the new State Code abbreviation based on the ZIP Code: For example, if the old address appears as "APO New York, NY 091XX", convert to read as "APO AE 091XX".

(5) Route returns with a foreign address to OSPC for processing. Prepare Letter 86C to inform the partnership that the return has been sent. See Figure 3.11.15-2 below.

(6) U.S. Possessions/Territories - The following U.S. Possessions/Territories are considered Foreign Addresses and must be sent to OSPC for processing:

(7) A ZIP Code must be present for U.S. Possessions/Territories. Edit the correct ZIP Code if one is not given. See Exhibit 3.11.15-6, U.S. Possessions/Territories ZIP Codes.

(1) Businesses use frivolous arguments for expressing dissatisfaction with the substance, form or administration of the tax laws by trying to illegally avoid or reduce tax liabilities. See IRM 25.25.10, Frivolous Return Program, and Exhibit 3.11.15-4, Potential Frivolous Arguments for Examination Review, for a list of recognized frivolous arguments made by businesses.

(2) Review the return to decide whether it appears to be a frivolous return.

(3) Do not consider the following returns as frivolous, unless there is other evidence of a frivolous argument:

• Returns that have only zeros, blanks, or not entries.

• Returns showing "None", "Not Liable", etc.

(1) Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC include willful attempts to evade or defeat the income tax. Criminal tax violations also include the willful failure to collect or pay over tax and false claims for refunds based on bogus return information.

(2) If CI has stamped the return, do not send for further CI action.

(3) For returns with refund claims of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, do the following:

(4) Because of the repetitive nature of the C&E function, C&E Tax Examining Technicians often recognize income tax return data which is outside of the norm for data found on similar returns for each income tax return type. If C&E finds return characteristics not meeting Audit Code or Exam referral criteria it deems suspicious, CI is available to review the referral.

(5) If a suspicious return is found, do the following:

1. Make a copy of the first two pages of the tax return along with any page on the return that appears suspicious.

2. Attach Form 4227, Intra-SC Reject or Routing Slip, to the copy.

3. Route the copy as shown in the table below.

Ogden	Kansas City
Mail Stop 9001, Criminal Investigation (CI)	Mail Stop S2 9000, Criminal Investigation (CI)

4. Edit an action trail "Copy to CI", or "CI Referral", or similar language in the lower left corner going vertically up the side of the return.

5. Continue processing the return.

(6) If the return fits other criteria (e.g., Frivolous Argument), take proper action.

(1) The primary goal in identifying tax returns for examination is to promote the highest degree of voluntary compliance. Examination gives support and helps Submission Processing (SP) with any questionable return found during processing. Exam has a vast multitude of programs and tolerance criteria already found in several IRM sections. SP can refer any questionable return to Exam, unless prohibited by instructions currently found in several IRMs.

(1) Remove returns marked as "Protective Claims", "Protective Claim for Refund", or similar statement from the batch and route to Accounts Management (AM). Notate "Protective Claim" in the remarks box of Form 4227, Intra-SC Reject or Routing Slip.

(1) BMF (ID) Theft is increasing. If a case is found with attachments or correspondence showing the taxpayer is a victim of "ID Theft", give the entire case to the manager/lead.

(2) The manager/lead will expedite the case to the Planning and Analysis (P&A) staff for referral to one of the Submission Processing (SP) BMF ID Theft liaisons. The taxpayer must show that they are a victim of "ID Theft"; do not send cases that are subject to Criminal Investigation (CI), Examination (Exam), or Fraud review.

(1) Any return with a Received Date that is two years and nine months or more after the Return Due Date is a potential statute control return.

(2) Route Statute returns to the Statute Control Unit daily or more often if needed.

(3) If any of the conditions listed below are present, don’t route to Statute Control Unit for clearance. Instead, edit CCC "W", and continue processing.

• Compliance IRC 6020(b) returns.

• Secured by Examination/Collections, secured by Tax Exempt Government Entities (TEGE), Secured by TEGE Employee Plan (EP) Exam.

• Returns with Transaction Code (TC) 59X or "ICS" (Integrated Collections System) notated on the face of the return.

• Returns showing "substitute returns prepared by Examination (SFR)" in top margin of the return.

• Returns with a stamp indicating a previous clearance by Statute Control within the last 90 days.

• Return is a 2021 or prior year original. Due to the COVID-19 pandemic and subsequent Submission Processing (SP) and Accounts Management (AM) site closures, SP and AM developed procedures to bypass AM statute clearance and be processed. In addition, any 2021 and prior year returns previously cleared by AM statute will not be returned by SP to AM to be cleared again if the 90-calendar day statute stamp has expired.

(4) If a return has any of the following computer paragraphs (CPs) or letters are attached, do not route to Statute Control Unit for clearance. Edit CCC "W" if the return needs processing. See Exhibit 3.11.15-2, Routing Guide for Attachments, for more information.

• CP 259, Master File Generated 1st TDI Notice

• CP 959, Master File Generated 1st TDI Notice (Spanish version)

• CP 518, Final Notice - Return Delinquency

• Letter 112C, Payment/Overpayment/Credit Applied; No Record of Return Filed

• Letter 282C, Return Not Received; Copy Requested/Received

• Letter 2255C, Delinquent Return (Forms 720, 1041, 1065, 1120)

• Letter 2284C, Delinquent Return (Forms 940, 941, 942, 943)

(5) If a return has a Form 12412, Operations Assistance Request (OAR), from TAS and is a potential statute control return but is not stamped "Cleared by Statute", give the return to the lead. The lead contacts the TAS employee listed on the OAR for rejection of the return and sends it back to TAS for clearance by the Statute Control Unit.

(6) Statute returns are unprocessable until cleared by Statute Control.

(7) Edit CCC "W" if the Statute Control Unit stamps or shows clearance on the front of the return. (Figure 3.11.15-4).

(8) Statute may stamp a return as "No Statute Issue", "Statute N/A", or similar statement indicating there is no statute issue. Follow the chart below to determine if CCC "W" is needed:

(9) For partnership years beginning on or after January 1, 2018, IRC 6235 provides a general limitation period on making adjustments to partnership-related items that ends three years after the latest of (1) the date on which the partnership return was filed, (2) the return due date, or (3) the date on which the partnership filed an administrative adjustment request under section 6227. For partnership years beginning before January 1, 2018, IRC 6229 provides a minimum three year period of limitations to assess tax attributable to partnership items from partnerships covered under the Tax Equity Fiscal Responsibility Act (TEFRA).

(1) Section 965 (Repatriation Provision), Treatment of deferred foreign income upon transition to participation exemption systems of taxation for U.S. Shareholders of Specified Foreign Corporations per Tax Cuts & Jobs Act (Tax Reform), Public Law 115-97 (H.R. 1), Provision Section 14103, 131 STAT. 2195 (2017).

(2) Identify a Section 965 return when any of the following are present and the partnerships Tax Period is 201712 through 202012:

• "Section 965" or "965 Tax" (or similar language) notated on the return, attachments, or statements.

• IRC 965 Transition Tax Statement (or similar 965 statement) is attached.

• A significant entry is present on Line 11 or Line 13d of Schedule K, with the notation "Section 965" (or similar) statement.

  Note: A significant entry is defined as any amount other than zero.

• Code "G" in Box 11 on Schedule K-1, or Code "X" in Box 13 on Schedule K-1.

(3) When a return has been identified as a Section 965 return, edit as follows:

1. Completely edit the return.

2. Edit CCC "J". See IRM 3.11.15.15.7, CCC "J" - Section 965 Tax.

3. Edit Action Code 460. See IRM 3.11.15.2.5, Action Codes.

4. Do not issue correspondence on the return. ERS will take care of any correspondence needed.

   Note: Notate "K-1 missing" or similar in the lower left margin (action trail) of the return, if correspondence is needed for missing Schedules K-1.

(1) This subsection pertains to tax periods 202201 through 202212.

(2) Under the Inflation Reduction Act (IRA) of 2022 and CHIPS and Science Act of 2022, a taxpayer, or in the case of a partnership that directly holds a facility or property the partnership, can elect to:

• Take certain credits as an "Elective or Deemed Payment".

• Transfer certain credits to another taxpayer.

• Claim the credit as a General Business Credit.

(3) Identify an "Elective or Deemed Payment Election" when the taxpayer writes "IRA22DPE" on an attachment or on Form 1065, Line 28.

(4) When a return is identified with an "Elective or Deemed Payment Election" do the following:

1. Completely edit the return.

2. Edit RPC "J".

3. Place a flag at the top of the return and attach the "IRA22DPE/TRE" reminder sheet to the return.

   Note: P&A will provide the pre-printed half-sheets for C&E to use.

4. Give the return to the lead.

5. The lead will have the returns rebatched with "DPE" in the batch ID.

(5) Identify a "Credit Transfer" when the taxpayer writes "IRA22TRE" on an attachment or at the top of the return. When found, do the following:

1. Completely edit the return.

2. Edit RPC "K".

3. Place a flag at the top of the return and attach the "IRA22 DPE/TRE" reminder sheet to the return.

   Note: P&A will provide the pre-printed half-sheets for C&E to use.

4. Give the return to the lead.

5. The lead will have the return rebatched with "TRE" in the batch ID.

   Note: A return can have both an RPC "J" and an RPC "K".

(6) If the tax period is 202301 or later see IRM 3.11.15.37, Form 3800, General Business Credit.

(1) Compliance functions (Collections and Examination) secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

(2) Compliance notates:

1. Prepared tax returns with "6020(b)" or "SFR" (Substitute for Return).

2. Secured tax returns with "TC 59X" or "ICS" or "Process as Original" with a Form 13133, Expedite Processing Cycle, attached with the "Delinquent Return" box checked.

3.11.15.5.4.1 (01-01-2022)

♦IRC 6020(b) - Prepared by Collection♦

(1) When the taxpayer doesn’t file a required return, IRC 6020(b) is the authority for the IRS to prepare the return.

(2) These returns are identified by the notation: "PREPARED AND SIGNED UNDER THE AUTHORITY OF SECTION 6020(b) OF THE INTERNAL REVENUE CODE", which is found in the center bottom of page 1 of the return.

1. Returns must have an IRS Received Date. If missing, follow the normal procedures for editing the Received Date. See IRM 3.11.15.6, Received Date.

2. Compliance Function representatives must sign returns. If not signed, route to Compliance using Form 4227, Intra-SC Reject or Routing Slip.

   Note: Accept revenue officer’s (RO) electronic or typed signatures as valid signatures on the return.

3. Edit CCC "4". See IRM 3.11.15.15.20, CCC "4" - IRC 6020(b) Return and Figure 3.11.15-5.

   Note: Do not use CCC "R" with CCC "4".

4. Edit CCC "D" if the Compliance Function representative notates "DO NOT ASSESS FAILURE TO PAY PENALTY" and the return due date (without regard to extensions) is July 30, 1996 or before.

   Note: Do not edit CCC "D" if the return due date is after July 30, 1996 (without regard to extensions) even if the Compliance Function representative notates "DO NOT ASSESS FAILURE TO PAY PENALTY".

5. Do Not correspond with the taxpayer for unprocessable conditions. If the return is unprocessable, edit CCC "3" and continue processing.

6. Edit CCC "W" if the IRS Received Date is more than two years and nine months after the Return Due Date. Do Not send the return to Statute Control. See IRM 3.11.15.15.14, CCC "W" - Return Cleared by Statute Control.

7. Number of partners, Line I, must be 2 through 999,999.

If	Then
Number of partners is blank,	See IRM 3.11.15.16, Line I - Number of Schedules K-1 (or Number of Partners).
Number of partners is greater than 100,	Edit CCC "6".

3.11.15.5.4.2 (01-01-2022)

♦Collection Secured♦

(1) These returns are identified by the notations: "TC 59X" or "ICS". See Figure 3.11.15-6

1. Do Not edit CCC "G" on these returns.

2. Use approved Correspondence Action Sheet to correspond for conditions that are unprocessable (e.g., missing signatures, missing schedules, etc.).

3. Edit CCC "W" if the IRS Received Date is more than two years and nine months after the Return Due Date. Do Not send the return to Statute Control. See IRM 3.11.15.5.1, Statute Returns.

4. Number of partners, Line I, must be 2 through 999,999.

If	Then
Number of partners is blank,	See IRM 3.11.15.16, Line I - Number of Schedules K-1 (or Number of Partners).
Number of partners is greater than 100,	Edit CCC "6".

(1) Reprocess a return posted to the wrong account or module and post it to the correct account module.

(2) Some re-entry returns may have originally been filed electronically (E-File) or via Modernized E-file (MeF). These returns may be identified by the presence of Mod E-file printouts in lieu of an actual return.

• Do not correspond for missing signatures on these documents.

• Edit a CCC "6" if more than 100 partners.

(3) Each re-entry return must have a Form 3893, Re-Entry Document Control, or Form 13596, Reprocessing Returns attached.

• Form 3893 is used to re-input documents that have not posted to an account or module

• Form 13596 is used to reprocess documents to the correct account or module, that had previously posted to an incorrect account or module

(4) Always leave the Form 3893 or Form 13596 on the front of the return. It must remain as a permanent part of the document.

(5) Examine Form 3893 or Form 13596 to determine the action needed to make the return processable.

(6) If Schedule K-1’s are attached to a Reprocessable/Re-Entry return, process the K-1’s like any other return using the instructions in IRM 3.0.101, Schedule K-1 Processing.

(1) Document Perfection identifies refunds in jeopardy and requests manual refunds.

(1) A return is considered Amended based on the following:

• The Amended Box is checked.

• On MeF returns the "Superseded Return" or the" Amended Return" box is checked. The "Superseded Return" and the "Amended Return" boxes will only be on MeF returns that have been printed. They will be found on Line G.

• Words such as "Supplemental", "Corrected", or "Additional" are present.

• Any indication from the taxpayer that a previous return was filed.

• Form 1065X is attached for the Tax Period of the Form 1065 filed.

Note: Words such as "Copy" or "Duplicate" are not sufficient indicators and must be accompanied by a statement from the taxpayer that a previous return was filed.

(2) Examine the return for attachments:

• Do not separate any related attachments submitted to explain the reason for the Amended return. Accounts Management may use the information.

• Detach any unrelated documents, route them to the correct function using Form 4227, Intra-SC Reject or Routing Slip, and edit the Action Trail on the return

(3) Follow the instructions in the chart below when there is an indication of an amended return:

(4) The following data must be edited on all amended returns:

1. Name Control - See IRM 3.11.15.9.3, Entity Perfection - Name Control

2. EIN - See IRM 3.11.15.9.2, Entity Perfection - Employer Identification Number (EIN)

3. Tax Period - See IRM 3.11.15.8.1, Tax Period Ending

4. CCC "G"

5. IRS Received Date - See IRM 3.11.15.6, Received Date

6. Signature - See IRM 3.11.15.7, Signature

(5) Detach Schedules K-1 for current year (TY2024), two preceding years (TY2023 and TY2022) and future Schedules K-1. Process according to IRM 3.0.101, General - Schedule K-1 Processing.

(1) This subsection gives instructions for editing Short Record returns. Short Record returns include:

• IRC 761(a) Returns

• Common Trust Returns

• Nominee Returns

• Inactive Returns

(2) Short record returns must be edited correctly to prevent erroneous assessment of any penalties.

(3) Process as a Short Record unless any of the following conditions apply:

1. An audit code (other than "1" for 761(a) returns) is present, See IRM 3.11.15.19.1, Audit Codes.

2. A nonrecourse loan code is edited, See IRM 3.11.15.19.4, Nonrecourse Loan Code.

Reminder: On Short Record Returns, do not correspond for missing information or attachments (unless directed by Examination on 761(a) returns), and do not edit CCC "A".

3.11.15.5.8.1 (01-01-2023)

IRC 761(a) Returns

(1) IRC 761(a) permits certain arrangements treated as partnership to elect to be excluded from the partnership rules. Form 1065 must be filed only for the year of the election and a statement of the election must be attached to the return. If the return shows any tax data relating to an entity level computation of income, it cannot be treated as a Section 761(a) election.

(2) Form 1065 can be identified as a potential Section 761(a) election if the return has all of the following:

• Name or other identification, address, EIN, but no tax data for the organization

• Names, addresses, and identification numbers of all the organization's members

• Statement that the organization qualifies, and the members elect, to be excluded from Subchapter K

(3) Or, the partnership references any of the following:

• IRC 761(a) or Treas. Reg. 1.761-2 annotated

• Rev. Proc. 2002-68 (for tax years beginning before 01/01/2004)

• Rev. Proc. 2003-84 (for tax years beginning after 01/01/2004)

• Publication 541 (Partnerships)

• Publication 550 (Investment Income and Expenses)

• The joint purchase, retention, sale, or exchange of investment property

• The joint production, extraction, or use of property

• Exclusion filed under Subchapter K

• Lottery Club

(4) When a return is identified as a potential IRC 761(a) election, suspend the editing of the return and hold for periodic review by Examination Classification. The frequency of the review will be determined by campus management.

(5) Examination will determine if the election is accepted, rejected, or selected for examination. After Examination has made its determination, process each group of returns as follows:

If	Then
Election is "ACCEPTED" by Examination,	Edit CCC "F". Edit as Short Record (SR). See IRM 3.11.15.5.8, Short Record Returns - General Instructions (for All Short Records).
Return is "SELECTED FOR EXAMINATION",	Edit Audit Code "1". Continue editing the return. See IRM 3.11.15.5.8 and IRM 3.11.15.19.1 for information regarding Short Record returns and Audit Codes, respectively.
Election is "REJECTED" by Examination,	Edit as Form 1065 long record. Note: For purposes of these instructions, long records must include all other information found on the return (i.e., income, deductions, all schedules and attachments).
Correspondence is required,	Issue Letter 1355C, Partnership Return Incomplete for Processing Form 1065, requesting information as directed by the Examination representative.

Note: Phone inquiries regarding technical questions should be directed to the Examination representative.

(6) Process "Accepted" and "Selected" Section 761(a) elections as a Short Record return:

(7) Edit when required:

• Always edit "SR" in the top margin above the form number "1065"

• Always edit "761(a)" in the upper left hand corner of Form 1065

• Always edit Computer Condition Code "8". (IRM 3.11.15.15.23)

• Name Control (IRM 3.11.15.9.3)

• EIN (IRM 3.11.15.9.2)

• Tax Period Ending (IRM 3.11.15.8.1)

• Tax Period Beginning if CCC "F" is edited - See IRM 3.11.15.8.2

• Number of partners (IRM 3.11.15.16)

  Note: Edit number of partners as "2" if missing.

• Received Date See IRM 3.11.15.6, Received Date

• Address change, if present IRM 3.11.15.9.5

Note: No further editing is required.

(8) For elections "accepted" by Examination, edit Computer Condition Code "F" on the return. See Figure 3.11.15-7 below.

(9) For elections "selected" by Examination, edit Audit Code "1" on the return.

3.11.15.5.8.2 (01-01-2023)

Common Trusts

(1) Identify IRC 6032, Common Trust Fund Filers, by any of the following entries:

• Box A, Principal Business Activity - Partnership entered: "COMMON TRUST FUND" or "Common Trust"

• Box C, Business Code Number - Partnership entered "525920" (North American Industry Classification System (NAICS) Code

• Partnership notates on Form 1065 "IRC 6032 COMMON TRUST FUND" or similar notation

(2) Process as a Short Record return.

Note: Do not edit as a Short Record if return requires an Audit Code (Other than 1 for 761a) and/or Non-recourse Code or is a publicly traded partnership.

(3) Edit when required:

• Always edit "SR" in the top margin above the form number "1065" See Figure 3.11.15-8

• Name Control - IRM 3.11.15.9.3

• EIN - IRM 3.11.15.9.2

• Tax Period Ending - IRM 3.11.15.8.1

• Tax Period Beginning - IRM 3.11.15.8.2

• Received Date - IRM 3.11.15.6

• Number of Partners - If blank or "1", edit a "2"

• Computer Condition Codes (CCC)

Reminder: Always edit CCC "5 "IRM 3.11.15.15.21.
≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• Address change if present

Note: No further editing is required.

(4) If the partnership submits a Common Trust return on a non-standard form (Common Trust Fund Return of Income, letter with Investment Trust Company letterhead, etc.), prepare a dummy Form 1065 with the following information:

1. Name and address - IRM 3.11.15.9

   Note: If the name and/or address cannot be determined, perform IDRS research using the EIN given on the return/letter.

2. EIN - IRM 3.11.15.9.2

3. Tax Period - IRM 3.11.15.8

4. Received Date - IRM 3.11.15.6

5. Computer Condition Codes (CCC)

6. Number of partners - IRM 3.11.15.16

(1) The Paid Preparer Checkbox is found next to the taxpayer signature area. It shows whether the partnership has elected to allow the Paid Preparer to answer questions about the return as it is processed.

(2) No action is required on amended or Short Record returns.

(3) Take the following actions when an entry is present in the Paid Preparer Checkbox:

(1) The Paid Preparer section is found below the taxpayer signature area at the bottom of Form 1065.

3.11.15.7.2.3 (01-01-2019)

♦Paid Preparer Phone Number♦

(1) The Paid Preparer's Phone Number is found below the Firm's EIN at the bottom right corner of Form 1065 (page 1).

If	Then
The return is amended,	No action is required.
The Preparer's Phone Number is more than 10 digits,	No action is required.
The Preparer's Phone Number is illegible or less than 10 digits,	Circle the phone number. See Figure 3.11.15-11 below.

(1) All returns must have a Tax Period Ending.

(2) Edit the Tax Period Ending to the right of the form title in YYMM format.

(3) Tax Periods reported under the 52/53-week are treated as:

• Beginning on the first day of the calendar month beginning nearest to the first day of the 52/53-week tax year, and

• Ending on the last day of the calendar month ending nearest to the last day of the 52/53-week tax year.

(4) If the resulting tax year is more than 12 months, correspond to obtain the correct Tax Period.

(5) On a Final return, if the Tax Period's month and/or year is later than the Received Date's month and year (future return), edit the Tax Period to be one month before the Received Date. See Figure 3.11.15-13

(1) Edit the Tax Period Beginning (when present) to the left of the Form 1065 title area in MMDDYY format on an Initial, Final, or Short Period return as follows: See Figure 3.11.15-14 below.

(1) Identify an "Initial" Short Period Return by any of the following:

1. The "Initial return" box is checked.

2. The return or attachments shows "INITIAL", "FIRST RETURN", "FIRST TIME FILER", etc.

3. An entry in Box E, "Date Business Started", is within 12 months of the Tax Period Ending Date.

(2) Edit the Tax Period Beginning in MMDDYY format per IRM 3.11.15.8.2.

(3) Edit initial Return Code 2 to the left of Line G. See IRM 3.11.15.13. See Figure 3.11.15-14.

(1) Identify a "Final" Short Period return by any of the following:

1. The "Final return" box is checked.

2. The return or attachments shows "FINAL", "OUT OF BUSINESS", "NO LONGER LIABLE", etc.

3. Partnership cites IRC 708(b)(1)(B)(for taxable years ending on or before 12/31/2017).

(2) Edit the Tax Period Beginning in MMDDYY format on a "Final" Form 1065 Return per IRM 3.11.15.8.2.

(3) A "Final" Short Period return ends on the date the partnership went out of business. Use the numeric designation of the calendar month in which it ended. If the partnership does not show the month the business ended, edit the Tax Period ending as one month before the return Received Date.

(4) Edit CCC "F" to the center of the dotted portion on Line 2. Cost of goods sold (Form 1065).

(5) If the partnership files both a Final and Initial Short Period return using one EIN, which together cover no more than one 12 month or 52-53 week period and both returns are received together for editing, do the following:

• Combine both returns into one return.

• Combine money amounts from transcription lines.

• If conflicting information is present (i.e., Number of Partners, Business Code etc.), use the information from the Final or latest return.

• Process the combined return.

(1) If the Tax Period on the return is for a Short Period other than an "Initial" return (Form 1065, page 1, Line G, Box (1)) or a "Final" return (Form 1065, page 1, Line G, Box (2)), review Form 1065 for an indication that the partnership is changing their accounting period.

(1) An Early Filed Return is defined as a return whose Received Date is before its Tax Period Ending Date.

(2) Never send back an Early-Filed return to the partnership. Correspond for any missing information before suspending the return:

(1) If the Form 1065 shows bankruptcy (e.g., shows "RECEIVER", "TRUSTEE", or "DEBTOR IN POSSESSION") in the entity area or on an attachment, route to Entity Control. Follow local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

(2) Completely edit the return except the name control prior to routing to Entity Control.

(1) The EIN is a nine digit number (XX-XXXXXXX) assigned to identify the partnership.

(2) The EIN is found in the upper right of Form 1065 (Employer Identification Number, Box D).

(3) Determine the EIN as follows:

If	And	Then
EIN is missing,	You can determine the correct EIN from the attachments and/or schedules,	Edit the EIN to the proper location.
The EIN is either a Preparer/ Practitioner Tax Identification Number (PTIN), Social Security Number (SSN) or Individual Tax Identification Number (ITIN),	Unnumbered,	Remove return from batch. Forward to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal for EIN assignment.
The EIN is either a PTIN or ITIN,	Numbered,	Edit Action Code 320. Leave return in batch.
Multiple EINs are present,	Unnumbered,	Remove return from batch. Forward to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal for EIN assignment.
Multiple EINs are present,	Numbered,	Edit Action Code 320. Leave return in batch.
The EIN has any of the following conditions and can’t be determined from attachments and/or schedules: Illegible; Missing; Other than 9 digits; All zeroes; or, All nines,	Unnumbered,	Circle all illegible EINs, zeroes or nines. Research IDRS. If found, edit to the proper location. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.
The EIN has any of the following conditions and can’t be determined from attachments and/or schedules: Illegible; Missing; Other than 9 digits; All zeroes; or, All nines,	Numbered,	Circle all illegible EINs, zeroes or nines. Edit Action code 320. Leave return in batch.
"PENDING", "APPLIED FOR", etc., is shown in the EIN area,	Unnumbered,	Research IDRS. If found, edit to the proper location. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.
"PENDING", "APPLIED FOR", etc., is shown in the EIN area,	Numbered,	Edit Action Code 320. Leave return in batch.

(1) The Name Control consists of four characters or less:

1. Valid characters are alpha, numeric, ampersand (&), hyphen (-) and blank. However, blanks are only valid in the last three positions.

2. Disregard the word "THE" in the Name Control only when followed by more than one word.

   Note: If an individual and a trade name are present and it can be determined that the trade name is for a corporation or partnership, follow the Name Control procedures for corporations or partnerships. If other than a corporation or partnership, follow the Name Control procedures for individuals, regardless of which line the individual owner's name is listed.

(2) See job aid Document 7071-A, Name Control Job Aid - For Use Outside the Entity Area, to determine the Name Control.

(3) Name Controls for EINs assigned by the Mod IEIN program are different. If the EIN prefix begins with 20, 26, 27, 45, 46, 47, 81, 82, 83, 84, 85, 86, 87, 88, 92, or 93, then the Name Control will be the first four characters of the first name in the Primary Name Line.

(4) If Line G, box (3), "Name Change", is checked, route the return to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

(5) Edit the Name Control as follows:

If	And	Then
Able to determine the Name Control,		Underline the Name Control
Unable to determine the Name Control,	Unnumbered,	Research IDRS. If found, edit to the proper location. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.
Unable to determine the Name Control,	Numbered,	Edit Action Code 352 (Name Research). Leave return in batch.

(1) An "in-care-of" name can be identified by the words "in care of" or the symbols "c/o" or "%" (percent).

(2) Ensure the "in-care-of" name is found in the proper location.

(3) Determine a change in the in-care-of name by any of the following:

• A check mark in the "Name Change" box Line G, Box (3)

• A check mark in the "Address Change" box Line G, Box (4)

• Taxpayer edits or added to the "in-care-of" name (e.g., original "in-care-of" crossed out, new name added, etc.)

(1) Perfect the address when the mailing address (Street or P.O. Box) is not easily identified.

(2) A business may have two addresses. One is the mailing address and the other is the location address or physical location of the business.

(3) Perfect the address as follows:

(4) The U.S. Postal Service established new address requirements for Army Post Office (APO)/Diplomatic Post Office (DPO)/Fleet Post Office (FPO) addresses. If the old address appears, convert to the new State Code abbreviation based on the ZIP Code (e.g., APO New York, NY 091XX would be converted to APO AE 091XX). Consider APO/DPO/FPO addresses as domestic addresses. Refer to APO/DPO/FPO conversion chart below:

(1) A foreign (international) address is any address that is not in the 50 states or the District of Columbia.

(2) Consider returns with Army Post Office (APO)/Diplomatic Post Office (DPO)/Fleet Post Office (FPO) addresses as domestic addresses. See IRM 3.11.15.9.5, Entity Perfection - Domestic Addresses.

(3) Route returns with a foreign address to Ogden Submission Processing (OSPC) for processing. Prepare Letter 86C, Referring Taxpayer Inquiry/Forms to Another Office, to inform the partnership IRS sent the return to Ogden.

(4) Consider returns with addresses in the following U.S. Possessions/Territories as foreign for processing purposes. Edit the same way as domestic addresses.

1. Edit a two-character alpha code for the Possession/Territory name:

U.S. Possession/Territory	Abbreviation
American Samoa	AS
Federated States of Micronesia	FM
Guam	GU
Marshall Islands	MH
Northern Mariana Islands	MP
Palau	PW
Puerto Rico	PR
Virgin Islands (U.S.)	VI

2. A ZIP Code must be present on U.S. Possessions/Territories. Edit the correct ZIP Code if one is not given. See Exhibit 3.11.15-6, U.S. Possessions/Territories ZIP Codes.

(5) All other foreign addresses are edited the same as a domestic address with the following exceptions:

1. Ensure the foreign country is the last entry in the address.

2. Circle the foreign country and edit the country code preceded by a "/" and followed by "/$" (e.g., edit Germany as "/GM/$") See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, for official foreign country codes.

3. Edit a unique country code for returns filed with an address in Canada. See IRM 3.11.15.9.6.1, Country Code - Canada.

   Note: Submission Processing BMF Foreign Address Job Aid (Number 2324-002) gives examples for editing foreign addresses.

4. If the foreign address is from Australia, Brazil, Cuba, Italy, Mexico, or The Netherlands, check if the address has a province, state, or territory.

   Note: There may be other countries with provinces, states, and territories not listed above, see Coding and Editing BMF Tax Returns, Foreign Addresses Job Aid (Number 2324-002) for more information.

If	Then
A province, state or territory name is present,	Circle province, state or territory name. Edit correct abbreviation. See Exhibit 3.11.15-5, Province, Foreign State, and Territory Abbreviations.
A province, state or territory is shown in abbreviated format,	Continue editing the return.
A province, state, or territory name is not present,	Continue editing the return.

5. A ZIP Code or state is not required on a foreign address. Foreign addresses use a postal code that is entered before the city or foreign country and is part of the address.

6. Edit CCC "9" when the address on the partnership return is foreign.

(1) Edit CCC "A" when the "Date Business Started", Box E is blank.

(1) Edit CCC "B" when any of the following conditions are met:

1. Schedule M-3 box (Line J on Form 1065 or Form 1065-B) is checked or

2. A Schedule M-3 is attached.

(2) Edit Audit Code "8" if Schedule M-3 is attached to Form 1065 or Form 1065-B. See IRM 3.11.15.19.1, Audit Codes.

(1) Do not edit CCC "D" if the taxpayer requests abatement for "Failing to Pay Timely" when the return is submitted. Send Letter 1382C, Penalty Removal Request Incomplete, to inform the taxpayer of the proper procedure to follow to request penalty abatement when a penalty is assessed.

(2) IMPORTANT: Edit CCC "D" if an internal use form (i.e., Form 13133, Expedite Processing Cycle) or routing slip is attached and shows "DO NOT ASSESS FAILURE TO PAY PENALTY".

(1) Edit CCC "F" when the "Final Return Box" is checked or there is another indication the partnership is not liable for future returns. Notations may include (but are not limited to):

• Final

• Deceased

• Out of Business

• Liquidation

• Exempt under IRC 501(c)(3)

• Dissolved

• Cites IRC 708(b)(1)(B)(for taxable years ending on or before 12/31/2017).

• Notates "Filed in accordance with Rev. Proc. 2003-84".

• Return is a "Nominee" return.

• "761(a) election" notated and is accepted by Examination.

(1) See IRM 3.11.15.5.7, Amended Returns.

(1) Edit CCC "I" (i) when Form 6781 (Gains and Losses From Section 1256 Contracts and Straddles) is attached. See Figure 3.11.15-23 below.

(1) CCC "J" is used to show a Section 965 return. See IRM 3.11.15.5.2, Section 965 Returns, for more information.

(2) Edit CCC "J" when any of the following are present:

• "Section 965" or "965 Tax" (or similar language) notated on the return, attachments, or statements.

• IRC 965 Transition Tax Statement (or similar statement) attached. Section 965 is applicable for tax years 201712 through 202012.

• A significant entry is present on Line 11 or Line 13d of Schedule K, with the notation "Section 965" (or similar) statement.

(3) Also edit Action Code 460 when any of the above criteria is met. See IRM 3.11.15.2.5, Action Codes.

(1) Edit CCC "L" when taxpayer attaches Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), to the return.

(1) Edit CCC "M" when both of the following conditions are present:

• Tax Period is 201712 or later, and

• Form 8949, Sales and Other Dispositions of Capital Assets, has a code Z or Y in column (f).

(1) No editing required.

(1) Do not edit CCC "R" when a reason is given by the partnership for a delay in filing a return. Issue Letter 1382C, Penalty Removal Request Incomplete and continue editing the return.

(2) Edit CCC "R" on the partnership return when any of the following conditions are present:

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡"

• "≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

• ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡

(1) Edit CCC "S" when Form 8883, Asset Allocation Statement under Section 338, is attached.

(1) Edit CCC "T" when Form 8271, Investor Reporting of Tax Shelter Registration Number, is attached.

(2) Edit CCC "T" when Form 8886, Reportable Transaction Disclosure Statement, is attached.

(1) Edit CCC "W" when Statute Control cleared the return. See IRM 3.11.15.5.1, Statute Returns

(1) Edit CCC "X" on partnership returns filed by Publicly Traded Partnerships that include a tax computation of 3.5% in the margin to the right of Line 23 (Form 1065) or an attachment. See IRM 3.11.15.22.16, and IRM 3.11.15.75, Publicly Traded Partnerships.

(2) Edit CCC "X" on partnership returns if Form 8697, Interest Computation Under the Look-Back Method for Completing Long-Term Contracts or Form 8866, Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method is attached and a $ amount (interest due) is written by the taxpayer in the bottom margin of Form 1065. See Exhibit 3.11.15-2, Routing Guide for Attachments, for instructions regarding Form 8697 and Form 8866.

(1) This subsection is reserved.

(1) Edit CCC "1" if Form 8824, Like-Kind Exchange, is attached.

(1) Edit CCC "2" if Form 8938, Statement of Specified Foreign Financial Assets, is attached. See IRM 3.11.15.24.16, Form 8938 - Statement of Specified Foreign Financial Assets (Question 20).

(1) Edit CCC "3" when the partnership return is unprocessable, and there is a sign that correspondence was sent and no reply received.

(1) Edit CCC "4" when the IRS Compliance Function prepared a return and the revenue officer entered "IRC 6020(b)".

(1) Edit CCC "5" when the partnership return is identified as a "Common Trust". See IRM 3.11.15.5.8.2, Common Trusts.

(1) Edit CCC "6" when the return has more than 100 partners and any of the following conditions are present:

• Inactive return

• Nominee return

• IRC 501(d) religious organization

• Substitute for Return (SFR)

• Re-entry/Re-input returns that have previously been e-filed.

(2) CCC "6" cannot be used with any other Computer Condition Code except "F", "R", "W", "4", "5", "8", and "9".

(1) Edit CCC "8" when a partnership return is identified as a Section 761(a), Return and/or Election and has been selected or accepted by Exam. See IRM 3.11.15.5.8.1, IRC 761(a) Returns.)

(1) Edit CCC "9" when the address on the partnership return is foreign.

(1) No more than 15 audit codes may be used at one time.

(2) Edit Audit Codes in the left margin next to Line 9 of Form 1065.

(3) Edit as "1 -" followed by the correct code(s).

(4) Edit Audit Code "1" if any of the following forms or conditions are present:

1. Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR), is attached.

2. Form 8275, Disclosure Statement, is attached or a statement referring specifically to IRC 6662 (Disclosure) or IRC 707 (Disguised Sale).

3. Form 8275-R, Regulation Disclosure Statement, is attached.

4. Form 8886, Reportable Transaction Disclosure Statement, is attached.

5. Section 761(a) election that is selected for examination.

6. Form 1065 has the notation Disregarded Entity in the header or entity portion of the return (on page 1, Form 1065 )

(5) Edit Audit Code "2" if any of the following forms and/or conditions are present:

1. Form 1065, page 2, Schedule B, Box 1(e), Foreign Partnership is checked.

2. Form 1065, page 2, Schedule B, Question 9* (Foreign Trust) is answered "Yes". *(Prior year revision, Question 11).

3. Form 1065, page 3, Schedule B, Question 13* (Form 8858) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. *(Prior year revision, Question 15).

4. Form 1065, page 3, Schedule B, Question 14* (Form 8805) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. *(Prior year revision, Question 16).

5. Form 1065, page 3, Schedule B, Line 15* has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. *(Prior year revision, Question 17).

6. Form 1065, page 5, Schedule K, Line 21* (Total Foreign Taxes) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. *(Prior year 2018 - 2021 revision, Line 16p), other *(2017 and prior year revisions, Line 16l).

7. Form 1065-B, page 2, Schedule B, Question 1, Box (e) (Foreign Partnership) is checked.

8. Form 1065-B, page 2, Schedule B, Question 3 (Multiple Partners) is answered "Yes".

9. Form 1065-B, page 2, Schedule B, Question 4 (Foreign Partners) is answered "Yes".

10. Form 1065-B, page 2, Schedule B, Question 8 (Foreign Trust) is answered "Yes".

11. Form 1065-B, page 2, Schedule B, Question 9 (Foreign Disregarded Entity) has an entry greater than 0 (zero).

12. Form 5471, Information Return with Respect to Certain Foreign Corporations, is attached.

13. Form 5472, Information Return of a Foreign Owned Corporation, is attached.

14. Form 5713, International Boycott Report, is attached and both questions in 7(f) are answered "Yes".

15. Form 8621, Return by a Shareholder of a Passive Foreign Investment Co. or Qualified Electing Fund, is present and Part V Line 15a-16f has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. For prior year revision (2011 and prior) check Part IV, Line 10a - 11f.

16. Form 8804, Annual Return for Partnership Withholding Tax (Section 1446), is attached.

17. Form 8805, Foreign Partners Information Statement of Section 1446 Withholding, is attached.

18. Form 8813, Partnership Withholding Tax Payment, is attached.

19. Form 8832, Entity Classification Election, is attached and box 6(d), 6(e) or 6(f) is checked.

20. Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), is attached.

21. Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs), is attached.

22. Form 8865, Information Return of U.S. Persons With Respect to Certain Foreign Partnerships, is attached.

(6) Edit Audit Code "3" if the following condition is present:

1. Form 1065, page 5, Schedule K, Lines 19a or 19b has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(7) Edit Audit Code "4" if the following condition is present:

1. Form 1065, page 5, Schedule K, Line 9c ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ andForm 1065, page 5, Schedule K, Line 10 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

2. Form 1065-B, Schedule B, Question 2 (Dual Partner Code) is present and the Yes box is checked (valid for Tax Period ending 201811 and before only).

(8) Edit Audit Code "5" if any of the following forms and/or conditions are present:

1. Form 8594, Asset Acquisition Statement, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

2. Form 8883, Asset Allocation Statement Under Section 338, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(9) Edit Audit Code "6" if Form 3115, Application for Change in Accounting Method, is attached.

(10) Edit Audit Code "7" if any of the following forms and/or conditions are present:

1. Form 1065, page 2, Schedule B, Question 10a* is answered "Yes". (Question 7 on Form 1065-B). *(Prior year revision, Question 12a).

2. Form 1065, page 5, Schedule K, Line 21* (Total foreign taxes) is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. *(Prior year 2021 revision, Line 16p), other *(Prior year revisions, Line 16l).

3. Form 5713, International Boycott Report, is attached and either one or both questions in 7(f) are not answered "Yes."

4. Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualifying Electing Fund, is attached and Part V Line 15a-16f has an entry of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. For prior year revision (2011 and before) check Part IV, Line 10a - 11f.

(11) Edit Audit Code "8" if Schedule M-3, Net Income (Loss) Reconciliation for Certain Partnerships, is attached.

(12) Edit Audit Code "9" if Form 1065, page 6, or Form 1065-B, page 5, Schedule M-2, Line 6b (Property Distribution) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(13) Edit Audit Code "C" if Form 8283, Noncash Charitable Contributions, is attached and any of the following conditions are present:

1. Box 2b is checked.

2. Box 2b(1) is checked.

3. Line 3, column h has an entry.

(1) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) If present, edit Code "2 - 1" in the left margin next to Line 9 of Form 1065.

(1) Form 6252, Installment Sale Income, is used to report the sale of property on the installment plan.

(2) Codes are based solely on the partnership response to Question 3 on Form 6252. See Figure 3.11.15-27 below.

(3) Edit the Installment Sale Indicator in the left margin next to Line 9 of Form 1065.

(4) Edit as "3 -" followed by the correct Installment Sale Indicator Code.

(5) Valid codes for Installment Sale Indicator are as follows:

(1) Edit a "4 - 1" in the left margin next to Line 9 of Form 1065 for the Nonrecourse Loan Code in the following instances:

1. If there is an entry other than zero on Schedule L, Line 18, Columns (b) or (d) on Form 1065.

   Note: Do not edit a "4-1" if a nonrecourse loan is shown on a Schedule L that has been deleted.

2. If Schedule K-1 (Form 1065), Question K, Nonrecourse, Beginning and/or Ending, has an entry other than zero or shows a percent figure or gives indication of any activity (all, half, prorated) rather than a dollar amount, treat the entry as if it is a dollar amount and code accordingly. (If the volume is greater than 20, sample at least 20 Schedules K-1). See Figure 3.11.15-28 below.

   Caution: Do not edit the amount from the Qualified Nonrecourse Financing line.

3. If Schedule K-1 is for a tax year before 2004, edit a "1" if there is an entry other than zero on the first line under Question f (Nonrecourse).

4. If an attachment shows a nonrecourse loan.

(2) In all other instances, leave blank.

(1) Edit a Code "6 - 3" in the left margin next to Line 9 of Form 1065 if the Tax Period is 8312 and later, Form 3468, Investment Credit, is attached, and there is an entry present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on the credit side of any of the following lines:

1. Tax Year 2023 and later - Code "3" if an amount is present on Form 3468, Part VII, Line 1 (Rehabilitation Credit); specifically Lines h and i.

2. Tax Year 2016 to 2022 - Code "3" if an amount is present on Form 3468, Part lll, Line 11 (Rehabilitation Credit); specifically Lines e and f.

(1) Edit the Penalty and Interest Code in the left margin next to Line 9 of Form 1065.

(2) Edit as "7-1" if precomputed interest or delinquency penalty is shown on the return with a received date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(1) A Return Processing Code (RPC) is an alpha or numeric character used to identify a specific condition for the computer.

(2) RPCs are edited on page 1, in the right margin next to Line 1c of Form 1065.

(3) Refer to the table below for an explanation of when to edit each RPC.

(1) For TY2024 Form 1065 the amount for:

• "Gross Receipts or Sales" is claimed on Line 1a.

• "Returns and Allowances" is claimed on Line 1b.

(2) Edit Lines 1a and 1b as follows:

(1) Cost of goods sold is reported on Line 2 of Form 1065.

(2) If Line 2 is blank, edit from Form 1125-A, Line 8 (IMPORTANT: 2010 and before revisions - this information was entered from Schedule A (Form 1065), Line 8). Bracket if necessary

(1) Line 3, Gross Profit, will be the amount calculated by subtracting Line 2 from Line 1c.

(2) Though Line 3 is not a T-line, it may be necessary to compute this line in the following instances:

(1) Ordinary income or loss from other partnerships and fiduciaries is reported on Line 4 of Form 1065.

(2) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(1) The net profit or loss from farming is reported on Line 5 of Form 1065.

(2) This entry is supported by Schedule F (Form 1040), Profit or Loss From Farming, or an attached schedule.

1. If Line 5 is blank, edit the Net Farm Income or Loss from Schedule F (Form 1040), Line 34 or attached schedule.

(3) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(4) See IRM 3.11.15.28, Schedule F - Profit or Loss From Farming for Schedule F editing procedures.

(1) The net gain or loss on the sale of property used in a trade or business shown on Line 17 of Form 4797, Sale of Business Property is reported on Line 6 of Form 1065.

(2) See IRM 3.11.15.25.1, Line 2, Schedule K for more editing procedures.

(1) Other income or loss not shown on lines 1a through 6 is reported on Line 7 of Form 1065.

(2) An amount on Line 7 may be supported by an attached statement.

(3) Line 7 may include an amount from Form 6478 (Alcohol and Cellulosic Biofuel Fuels Credit). If Form 6478 is attached with a significant amount on *Line 5(c) or Line 8, edit Action Code 343.

(1) The total income or loss (sum of Lines 3 through 7) is reported on Line 8 of Form 1065.

(1) The salaries and wages paid during the year are reported on Line 9 of Form 1065.

(2) Entry must be positive.

(1) Payments made to partners for services or for the use of capital is reported on Line 10 of Form 1065.

(2) Entry must be positive.

(3) Accept the partnership entry.

(1) The cost of incidental repairs and maintenance that do not add to the value of the property or prolong its life is reported on Line 11 of Form 1065.

(2) Accept the partnership entry.

(1) Total debts that became worthless during the year is reported as bad debts on Line 12 of Form 1065.

(2) Accept the partnership entry.

(1) The rent paid on business property used by the partnership is reported on Line 13 of Form 1065.

(2) Entry must be positive.

(3) Accept the partnership entry.

(1) Taxes and licenses paid by the partnership are reported on Line 14 of Form 1065.

(2) Entry must be positive.

(3) Accept the partnership entry.

(1) Interest paid by the partnership is reported on Line 15 of Form 1065.

(2) Entry must be positive.

(3) Accept the partnership entry.

(1) The depreciation claimed on the partnership assets is reported on Lines 16a through 16c.

(1) The partnership reports a deduction for depletion on Line 17 of Form 1065.

(2) Accept the partnership entry.

(1) Partnership contributions to a qualified pension, profit-sharing, annuity or IRA plan is reported on Line 18 of Form 1065. See IRM 3.11.15.18.

(2) Accept the partnership entry.

(1) Partnership contributions to employee benefit programs (e.g., insurance, health and welfare programs) is reported on Line 19 of Form 1065.

(2) Accept the partnership entry.