Brown & Streza Blog
By David Keligian on 3/4/2019 11:59 AM
My last article dealt with the doctrine of “rescission”—the ability to go back in time to “re-do” a transaction for tax purposes. If you comply with the rescission requirements, you can fix anything as long as the fix occurs in the same tax year. But as pointed out in the article, once the tax year closes, you are stuck with the tax consequences for that year, even if you rescind the transaction in a later tax year.

This article addresses a little known provision of partnership tax law that blesses changing a partnership agreement after the close of a tax year, retroactively to the beginning of the prior tax year. You have until the original due date of the tax return for the partnership to amend the partnership agreement. This means that for the 2018 tax year, I can amend the partnership agreement for 2018 until March 15, 2019. Unfortunately, extending the partnership’s tax return doesn’t extend the deadline for amending the partnership agreement, but even so the rule is quite liberal.

Why is...