---
kind: "section"
citation: "26 U.S.C. § 6225"
title: "26"
title_heading: "Internal Revenue Code"
number: "6225"
heading: "Partnership adjustment by Secretary"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/6225"
units:
  - "Subtitle F — Procedure and Administration"
  - "Chapter 63 — Assessment"
  - "Subchapter C — Treatment of Partnerships"
  - "Part II — Partnership Adjustments"
---

# §6225. Partnership adjustment by Secretary

- (a) **In general—** In the case of any adjustments by the [Secretary](/usc/26/7701.md?p=a-11-B) to any [partnership](/usc/26/7701.md?p=a-2)-[related](/usc/26/7701.md?p=a-51-I-vi) items with respect to any reviewed year of a [partnership](/usc/26/7701.md?p=a-2)—
  - (1) if such adjustments result in an imputed [underpayment](/usc/26/6664.md?p=a), the [partnership](/usc/26/7701.md?p=a-2) shall pay an amount equal to such imputed [underpayment](/usc/26/6664.md?p=a) in the [adjustment year](/usc/26/7702.md?p=f-11-D) as provided in [section 6232](/usc/26/6232.md), and
  - (2) if such adjustments do not result in an imputed [underpayment](/usc/26/6664.md?p=a), such adjustments shall be taken into account by the [partnership](/usc/26/7701.md?p=a-2) in the [adjustment year](/usc/26/7702.md?p=f-11-D).
- (b) **Determination of imputed underpayments—** For purposes of this subchapter—
  - (1) **In general—** Except as otherwise provided in this section, any imputed [underpayment](/usc/26/6664.md?p=a) with respect to any reviewed year shall be determined by the [Secretary](/usc/26/7701.md?p=a-11-B) by—
    - (A) appropriately netting all [partnership](/usc/26/7701.md?p=a-2) adjustments with respect to such reviewed year, and
    - (B) applying the highest rate of tax in effect for the reviewed year under section [1](/usc/26/1.md) or 11.
  - (2) **Adjustments to distributive shares of partners not netted—** In the case of any adjustment which reallocates the distributive share of any item from one [partner](/usc/26/7701.md?p=a-2) to another, such adjustment shall be taken into account by disregarding so much of such adjustment as results in a decrease in the amount of the imputed [underpayment](/usc/26/6664.md?p=a).
  - (3) **Adjustments separately netted by category—** For purposes of [paragraph (1)(A)](#b-1-A), [partnership](/usc/26/7701.md?p=a-2) adjustments for any reviewed year shall first be separately determined (and netted as appropriate) within each category of items that are required to be taken into account separately under [section 702(a)](/usc/26/702.md?p=a) or other provision of this title.
  - (4) **Limitation on adjustments that may be taken into account—** If any adjustment would (but for this paragraph)—
    - (A) result in a decrease in the amount of the imputed [underpayment](/usc/26/6664.md?p=a), and
    - (B) could be subject to any additional limitation under the provisions of this title (or not allowed, in whole or in part, against ordinary income) if such adjustment were taken into account by any [person](/usc/26/7701.md?p=a-1),

    such adjustment shall not be taken into account under [paragraph (1)(A)](#b-1-A) except to the extent otherwise provided by the [Secretary](/usc/26/7701.md?p=a-11-B).

- (c) **Modification of imputed underpayments—**
  - (1) **In general—** The [Secretary](/usc/26/7701.md?p=a-11-B) shall establish procedures under which the imputed [underpayment](/usc/26/6664.md?p=a) amount may be modified consistent with the requirements of this subsection.
  - (2) **Procedures for partners to take adjustments into account—**
    - (A) **Amended returns of partners—** Such procedures shall provide that if—
      - (i) one or more [partners](/usc/26/7701.md?p=a-2) file returns for the [taxable year](/usc/26/7701.md?p=a-23) of the [partners](/usc/26/7701.md?p=a-2) which [includes](/usc/26/7701.md?p=c) the end of the reviewed year of the [partnership](/usc/26/7701.md?p=a-2) (and for any [taxable year](/usc/26/7701.md?p=a-23) with respect to which any tax attribute is affected by reason of any adjustment referred to in [clause (ii)](#c-2-A-ii)),
      - (ii) such returns take into account all adjustments under [subsection (a)](#a) properly allocable to such [partners](/usc/26/7701.md?p=a-2) (and the effect of such adjustments on any tax attributes), and
      - (iii) payment of any tax due is included with such returns,

      then the imputed [underpayment](/usc/26/6664.md?p=a) amount shall be determined without regard to the portion of the adjustments so taken into account.

    - (B) **Alternative procedure to filing amended returns—** Such procedures shall provide that, with respect to any [partner](/usc/26/7701.md?p=a-2) referred to in [subparagraph (A)](#c-2-A), the requirements of [subparagraph (A)](#c-2-A) shall be treated as satisfied with respect to adjustments properly allocable to such [partner](/usc/26/7701.md?p=a-2) if, in lieu of filing the returns described in such subparagraph—
      - (i) the amounts described in [subparagraph (A)(iii)](#c-2-A-iii) are paid by the [partner](/usc/26/7701.md?p=a-2),
      - (ii) the [partner](/usc/26/7701.md?p=a-2) agrees to take into account, in the form and manner prescribed by the [Secretary](/usc/26/7701.md?p=a-11-B), the adjustments to the tax attributes of such [partner](/usc/26/7701.md?p=a-2) referred to in [subparagraph (A)(ii)](#c-2-A-ii), and
      - (iii) such [partner](/usc/26/7701.md?p=a-2) provides, in the form and manner specified by the [Secretary](/usc/26/7701.md?p=a-11-B) ([including](/usc/26/7701.md?p=c), if the [Secretary](/usc/26/7701.md?p=a-11-B) so specifies, in the same form as on an amended return), such information as the [Secretary](/usc/26/7701.md?p=a-11-B) may require to carry out this subparagraph.
    - (C) **Reallocation of distributive share—** In the case of any adjustment which reallocates the distributive share of any item from one [partner](/usc/26/7701.md?p=a-2) to another, this paragraph shall apply with respect to any such [partner](/usc/26/7701.md?p=a-2) only if the requirements of subparagraph [(A)](#c-2-A) or [(B)](#c-2-B) are satisfied with respect to all [partners](/usc/26/7701.md?p=a-2) affected by such adjustment.
    - (D) **Application of statute of limitations—** In the case of adjustments referred to in [subparagraph (A)(ii)](#c-2-A-ii), sections [6501](/usc/26/6501.md) and [6511](/usc/26/6511.md) shall not apply with respect to any return filed for purposes of [subparagraph (A)(i)](#c-2-A-i) or any [amount paid](/usc/26/7702A.md?p=e-1-A) under subparagraph [(A)(iii)](#c-2-A-iii) or [(B)(i)](#c-2-B-i).
    - (E) **Adjustments to tax attributes binding for affected taxable years of partner—** The adjustments to the tax attributes of any [partner](/usc/26/7701.md?p=a-2) provided for in subparagraph [(A)(ii)](#c-2-A-ii) or [(B)(ii)](#c-2-B-ii) shall be binding with respect to the [taxable year](/usc/26/7701.md?p=a-23) of the [partner](/usc/26/7701.md?p=a-2) which [includes](/usc/26/7701.md?p=c) the end of the reviewed year of the [partnership](/usc/26/7701.md?p=a-2) and any [taxable years](/usc/26/7701.md?p=a-23) for which any tax attribute is affected by such adjustment. Any failure to so treat any such tax attribute shall be treated for purposes of this title in the same manner as a failure to treat a [partnership](/usc/26/7701.md?p=a-2)-[related](/usc/26/7701.md?p=a-51-I-vi) item in a manner which is consistent with the treatment of such item on the [partnership](/usc/26/7701.md?p=a-2) return within the meaning of section 6222.
    - (F) **1 Application to partnerships and S corporations in tiered structures—**
      - (i) **In general—** In the case of any [partnership](/usc/26/7701.md?p=a-2) any [partner](/usc/26/7701.md?p=a-2) of which is a [partnership](/usc/26/7701.md?p=a-2), subparagraph [(A)](#c-2-A) or [(B)](#c-2-B) may apply with respect to any [partner](/usc/26/7701.md?p=a-2) (hereafter in this subparagraph referred to as the “relevant [partner](/usc/26/7701.md?p=a-2)”) in the chain of ownership of such [partnerships](/usc/26/7701.md?p=a-2) if—
        - (I) such information as the [Secretary](/usc/26/7701.md?p=a-11-B) may require is furnished to the [Secretary](/usc/26/7701.md?p=a-11-B) for purposes of carrying out this paragraph with respect to such [partnerships](/usc/26/7701.md?p=a-2) ([including](/usc/26/7701.md?p=c) any information the [Secretary](/usc/26/7701.md?p=a-11-B) may require with respect to any chain of ownership of the relevant [partner](/usc/26/7701.md?p=a-2)), and
        - (II) to such extent as the [Secretary](/usc/26/7701.md?p=a-11-B) may require, each [partnership](/usc/26/7701.md?p=a-2) in the chain of ownership between the relevant [partner](/usc/26/7701.md?p=a-2) and the audited [partnership](/usc/26/7701.md?p=a-2) satisfies the requirements of subparagraph [(A)](#c-2-A) or [(B)](#c-2-B).
      - (ii) **Treatment of S corporations—** For purposes of [clause (i)](#c-2-F-i), an S [corporation](/usc/26/7701.md?p=a-3) and its [shareholders](/usc/26/7701.md?p=a-8) shall be treated in the same manner as a [partnership](/usc/26/7701.md?p=a-2) and its [partners](/usc/26/7701.md?p=a-2).
    - (F) **1 Adjustments not treated as amended return—** An administrative adjustment request under [section 6227](/usc/26/6227.md) and a [partnership](/usc/26/7701.md?p=a-2) adjustment tracking report under [section 6226(b)(4)(A)](/usc/26/6226.md?p=b-4-A) shall not be treated as a return for purposes of this paragraph.
  - (3) **Tax-exempt partners—** Such procedures shall provide for determining the imputed [underpayment](/usc/26/6664.md?p=a) without regard to the portion of the adjustment that the [partnership](/usc/26/7701.md?p=a-2) demonstrates is allocable to a [partner](/usc/26/7701.md?p=a-2) that would not owe tax by reason of its status as a tax-exempt entity (as defined in [section 168(h)(2)](/usc/26/168.md?p=h-2)).
  - (4) **Modification of applicable highest tax rates—**
    - (A) **In general—** Such procedures shall provide for taking into account a rate of tax lower than the rate of tax described in [subsection (b)(1)(A)](#b-1-A) with respect to any portion of the adjustment that the [partnership](/usc/26/7701.md?p=a-2) demonstrates is allocable to a [partner](/usc/26/7701.md?p=a-2) which—
      - (i) is a C [corporation](/usc/26/7701.md?p=a-3), or
      - (ii) in the case of a capital gain or qualified dividend, is an individual.

      In no event shall the lower rate determined under the preceding sentence be less than the highest rate in effect with respect to the income and [taxpayer](/usc/26/7701.md?p=a-14) described in [clause (i)](#c-4-A-i) or [clause (ii)](#c-4-A-ii), as the case may be. For purposes of [clause (ii)](#c-4-A-ii), an S [corporation](/usc/26/7701.md?p=a-3) shall be treated as an individual.

    - (B) **Portion of imputed underpayment to which lower rate applies—**
      - (i) **In general—** Except as provided in [clause (ii)](#c-4-B-ii), the portion of the imputed [underpayment](/usc/26/6664.md?p=a) to which the lower rate applies with respect to a [partner](/usc/26/7701.md?p=a-2) under [subparagraph (A)](#c-4-A) shall be determined by reference to the [partners](/usc/26/7701.md?p=a-2)’ distributive share of items to which the imputed [underpayment](/usc/26/6664.md?p=a) relates.
      - (ii) **Rule in case of varied treatment of items among partners—** If the imputed [underpayment](/usc/26/6664.md?p=a) is attributable to the adjustment of more than 1 item, and any [partner](/usc/26/7701.md?p=a-2)’s distributive share of such items is not the same with respect to all such items, then the portion of the imputed [underpayment](/usc/26/6664.md?p=a) to which the lower rate applies with respect to a [partner](/usc/26/7701.md?p=a-2) under [subparagraph (A)](#c-4-A) shall be determined by reference to the amount which would have been the [partner](/usc/26/7701.md?p=a-2)’s distributive share of net gain or loss if the [partnership](/usc/26/7701.md?p=a-2) had sold all of its assets at their fair market value as of the close of the reviewed year of the [partnership](/usc/26/7701.md?p=a-2).
  - (5) **Certain passive losses of publicly traded partnerships—**
    - (A) **In general—** In the case of a publicly traded [partnership](/usc/26/7701.md?p=a-2) (as defined in [section 469(k)(2)](/usc/26/469.md?p=k-2)), such procedures shall provide—
      - (i) for determining the imputed [underpayment](/usc/26/6664.md?p=a) without regard to the portion of the adjustment that the [partnership](/usc/26/7701.md?p=a-2) demonstrates is attributable to a net decrease in a specified passive activity loss which is allocable to a specified [partner](/usc/26/7701.md?p=a-2), and
      - (ii) for the [partnership](/usc/26/7701.md?p=a-2) to take such net decrease into account as an adjustment in the [adjustment year](/usc/26/7702.md?p=f-11-D) with respect to the specified [partners](/usc/26/7701.md?p=a-2) to which such net decrease relates.
    - (B) **Specified passive activity loss—** For purposes of this paragraph, the term “specified passive activity loss” means, with respect to any specified [partner](/usc/26/7701.md?p=a-2) of such publicly traded [partnership](/usc/26/7701.md?p=a-2), the lesser of—
      - (i) the passive activity loss of such [partner](/usc/26/7701.md?p=a-2) which is separately determined with respect to such [partnership](/usc/26/7701.md?p=a-2) under [section 469(k)](/usc/26/469.md?p=k) with respect to such [partner](/usc/26/7701.md?p=a-2)’s [taxable year](/usc/26/7701.md?p=a-23) in which or with which the reviewed year of such [partnership](/usc/26/7701.md?p=a-2) ends, or
      - (ii) such passive activity loss so determined with respect to such [partner](/usc/26/7701.md?p=a-2)’s [taxable year](/usc/26/7701.md?p=a-23) in which or with which the [adjustment year](/usc/26/7702.md?p=f-11-D) of such [partnership](/usc/26/7701.md?p=a-2) ends.
    - (C) **Specified partner—** For purposes of this paragraph, the term “specified [partner](/usc/26/7701.md?p=a-2)” means any [person](/usc/26/7701.md?p=a-1) if such [person](/usc/26/7701.md?p=a-1)—
      - (i) is a [partner](/usc/26/7701.md?p=a-2) of the publicly traded [partnership](/usc/26/7701.md?p=a-2) referred to in [subparagraph (A)](#c-5-A),
      - (ii) is described in [section 469(a)(2)](/usc/26/469.md?p=a-2), and
      - (iii) has a specified passive activity loss with respect to such publicly traded [partnership](/usc/26/7701.md?p=a-2),

      with respect to each [taxable year](/usc/26/7701.md?p=a-23) of such [person](/usc/26/7701.md?p=a-1) which is during the period beginning with the [taxable year](/usc/26/7701.md?p=a-23) of such [person](/usc/26/7701.md?p=a-1) in which or with which the reviewed year of such publicly traded [partnership](/usc/26/7701.md?p=a-2) ends and ending with the [taxable year](/usc/26/7701.md?p=a-23) of such [person](/usc/26/7701.md?p=a-1) in which or with which the [adjustment year](/usc/26/7702.md?p=f-11-D) of such publicly traded [partnership](/usc/26/7701.md?p=a-2) ends.

  - (6) **Other procedures for modification of imputed underpayment—** The [Secretary](/usc/26/7701.md?p=a-11-B) may by regulations or guidance provide for additional procedures to modify imputed [underpayment](/usc/26/6664.md?p=a) amounts on the basis of such other factors as the [Secretary](/usc/26/7701.md?p=a-11-B) determines are necessary or appropriate to carry out the purposes of this subsection.
  - (7) **Year and day for submission to Secretary—** Anything required to be filed or submitted under this subsection shall be submitted to the [Secretary](/usc/26/7701.md?p=a-11-B) not later than the close of the 270-day period beginning on the date on which the notice of a proposed [partnership](/usc/26/7701.md?p=a-2) adjustment is mailed under [section 6231](/usc/26/6231.md) unless such period is extended with the consent of the [Secretary](/usc/26/7701.md?p=a-11-B).
  - (8) **Decision of Secretary—** Any modification of the imputed [underpayment](/usc/26/6664.md?p=a) amount under this subsection shall be made only upon approval of such modification by the [Secretary](/usc/26/7701.md?p=a-11-B).
  - (9) **Modification of adjustments not resulting in an imputed underpayment—** The [Secretary](/usc/26/7701.md?p=a-11-B) shall establish procedures under which the adjustments described in [subsection (a)(2)](#a-2) may be modified in such manner as the [Secretary](/usc/26/7701.md?p=a-11-B) determines appropriate.
- (d) **Definitions—** For purposes of this subchapter—
  - (1) **Reviewed year—** The term “reviewed year” means the [partnership](/usc/26/7701.md?p=a-2) [taxable year](/usc/26/7701.md?p=a-23) to which the item being adjusted relates.
  - (2) **Adjustment year—** The term “[adjustment year](/usc/26/7702.md?p=f-11-D)” means the [partnership](/usc/26/7701.md?p=a-2) [taxable year](/usc/26/7701.md?p=a-23) in which—
    - (A) in the case of an adjustment pursuant to the decision of a court in a proceeding brought under [section 6234](/usc/26/6234.md), such decision becomes final,
    - (B) in the case of an administrative adjustment request under [section 6227](/usc/26/6227.md), such administrative adjustment request is made, or
    - (C) in any other case, notice of the final [partnership](/usc/26/7701.md?p=a-2) adjustment is mailed under section 6231.

## Footnotes

[^1]: So in original. Two subpars. (F) have been enacted.

## Source credit

(Added Pub. L. 114–74, title XI, § 1101(c)(1), Nov. 2, 2015, 129 Stat. 628; amended Pub. L. 114–113, div. Q, title IV, § 411(a), Dec. 18, 2015, 129 Stat. 3121; Pub. L. 115–141, div. U, title II, §§ 202, 203(a), 206(b), (p)(1), Mar. 23, 2018, 132 Stat. 1173, 1174, 1178, 1182.)

## Notes

### Editorial Notes

### Prior Provisions

A prior section 6225, added Pub. L. 97–248, title IV, § 402(a), Sept. 3, 1982, 96 Stat. 652; amended Pub. L. 105–34, title XII, § 1239(a), Aug. 5, 1997, 111 Stat. 1027, allowing assessments to be made only after partnership level proceedings were completed, was repealed by Pub. L. 114–74, title XI, § 1101(a), Nov. 2, 2015, 129 Stat. 625.

### Amendments

2018—Subsec. (a). Pub. L. 115–141, § 202(c)(1), amended subsec. (a) generally. Prior to amendment, subsec. (a) related to adjustment by the Secretary in the amount of any item of income, gain, loss, deduction, or credit of a partnership, or any partner’s distributive share thereof.

Subsec. (b). Pub. L. 115–141, § 202(a), amended subsec. (b) generally. Prior to amendment, subsec. (b) consisted of pars. (1) and (2) relating to determination of imputed underpayments in general and adjustments to distributive shares of partners not netted, respectively.

Subsec. (c)(2). Pub. L. 115–141, § 203(a), amended par. (2) generally. Prior to amendment, par. (2) related to amended returns of partners.

Subsec. (c)(2)(F). Pub. L. 115–141, § 206(b), added subpar. (F) relating to adjustments not treated as amended return.

Subsec. (c)(3). Pub. L. 115–141, § 202(b)(1), substituted “without regard to the portion of the adjustment” for “without regard to the portion thereof”.

Subsec. (c)(4)(A). Pub. L. 115–141, § 202(b)(2), substituted “with respect to any portion of the adjustment” for “with respect to any portion of the imputed underpayment” in introductory provisions.

Subsec. (c)(5)(A)(i). Pub. L. 115–141, § 202(b)(3), substituted “without regard to the portion of the adjustment” for “without regard to the portion thereof”.

Subsec. (c)(7). Pub. L. 115–141, § 206(p)(1), substituted “filed or submitted under this subsection” for “submitted pursuant to paragraph (1)”.

Subsec. (c)(9). Pub. L. 115–141, § 202(c)(2), added par. (9).

2015—Subsec. (c)(4)(A)(i). Pub. L. 114–113, § 411(a)(1), struck out “in the case of ordinary income,” before “is a C corporation”.

Subsec. (c)(5) to (8). Pub. L. 114–113, § 411(a)(2), added par. (5) and redesignated former pars. (5) to (7) as (6) to (8), respectively.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2018 Amendment

Amendment by Pub. L. 115–141 effective as if included in section 1101 of Pub. L. 114–74, see section 207 of Pub. L. 115–141, set out as a note under section 6031 of this title.

### Effective Date of 2015 Amendment

Amendment by Pub. L. 114–113 effective as if included in section 1101 of Pub. L. 114–74, see section 411(e) of Pub. L. 114–113, set out as a note under section 6031 of this title.

### Effective Date

Section applicable to returns filed for partnership taxable years beginning after Dec. 31, 2017, with certain exceptions, see section 1101(g) of Pub. L. 114–74, set out as a note under section 6221 of this title.