SCOPE OF ADJUSTMENTS SUBJECT TO PARTNERSHIP AUDIT RULES.

SEC. 201. SCOPE OF ADJUSTMENTS SUBJECT TO PARTNERSHIP AUDIT RULES. (a) In General.—Section 6241(2) is amended to read as follows: “(2) Partnership adjustment.— “(A) In general.—The term ‘partnership adjustment’ means any adjustment to a partnership-related item. “(B) Partnership-related item.—The term ‘partnership-related item’ means— “(i) any item or amount with respect to the partnership (without regard to whether or not such item or amount appears on the partnership’s return and including an imputed underpayment and any item or amount relating to any transaction with, basis in, or liability of, the partnership) which is relevant (determined without regard to this subchapter) in determining the tax liability of any person under chapter 1, and “(ii) any partner’s distributive share of any item or amount described in clause (i).” . (b) Coordination With Other Chapters.— (1) [26 U.S.C. 6241] In general.—Section 6241is amended by adding at the end the following new paragraph: “(9) Coordination with other chapters.— “(A) In general.—This subchapter shall not apply with respect to any tax imposed (including any amount required to be deducted or withheld) under chapter 2, 2A, 3, or 4, except that any partnership adjustment determined under this subchapter for purposes of chapter 1 shall be taken into account for purposes of determining any such tax to the extent that such adjustment is relevant to such determination. “(B) Timing of withholding.—In the case of any tax imposed (including any amount required to be deducted or withheld) under chapter 3 or 4, which is determined with respect to an adjustment described in subparagraph (A), such tax— “(i) shall be so determined with respect to the reviewed year, and “(ii) shall be so imposed (or so required to be deducted or withheld) with respect to the adjustment year. “(C) Statute of limitation on assessment.—For special rule with respect to limitation on assessment of taxes under chapter 2 or 2A which are attributable to any partnership adjustment, see section 6501(c)(12).” . (2) Special rule.—Section 6501(c) is amended by adding at the end the following new paragraph: “(12) Certain taxes attributable to partnership adjustments.—In the case of any partnership adjustment determined under subchapter C of chapter 63, the period for assessment of any tax imposed under chapter 2 or 2A which is attributable to such adjustment shall not expire before the date that is 1 year after— “(A) in the case of an adjustment pursuant to the decision of a court in a proceeding brought under section 6234, such decision becomes final, or “(B) in any other case, 90 days after the date on which the notice of the final partnership adjustment is mailed under section 6231.” . (c) Conforming Amendments.— (1) Section 6211(c) is amended to read as follows: “(c) Coordination With Subchapter C.—In determining the amount of any deficiency for purposes of this subchapter, adjustments to partnership-related items shall be made only as provided in subchapter C.” . (2) [26 U.S.C. 6221] Section 6221(a)is amended to read as follows: “(a) In General.—Any adjustment to a partnership-related item shall be determined, and any tax attributable thereto shall be assessed and collected, and the applicability of any penalty, addition to tax, or additional amount which relates to an adjustment to any such item shall be determined, at the partnership level, except to the extent otherwise provided in this subchapter.” . (3) Section 6222(a) is amended to read as follows: “(a) In General.—A partner shall, on the partner’s return, treat any partnership-related item in a manner which is consistent with the treatment of such item on the partnership return.” . (4) Section 6226(a)(2) is amended by striking “any adjustment to income, gain, loss, deduction, or credit” and inserting “any adjustment to a partnership-related item”. (5) Section 6227(a) is amended by striking “items of income, gain, loss, deduction, or credit of the partnership” and inserting “partnership-related items”. (6) Section 6231(a)(1) is amended by striking “any item of income, gain, loss, deduction, or credit of a partnership for a partnership taxable year” and inserting “any partnership-related item for any partnership taxable year”. (7) Section 6234(c) is amended by striking “all items of income, gain, loss, deduction, or credit of the partnership” and inserting “all partnership-related items”. (8) Section 7485(b) is amended by striking “partnership items” and inserting “partnership-related items (as defined in section 6241)”.