26 U.S.C. § 6221 — Determination at partnership level

(a) In general. Any adjustment to a partnership-related item^*, tax resulting from it, and penalty or additional tax related to it must be determined at the partnership^* level, unless this subchapter provides otherwise.

(b) Election out for certain partnerships with 100 or fewer partners. (1) This subchapter does not apply to a partnership for a tax year if (A) the partnership elects this subsection for that year; (B) it must furnish no more than 100 partner^* statements under section 6031(b); (C) every partner is an individual, C corporation^*, foreign entity that would be a C corporation^* if domestic, S corporation^*, or estate of a deceased partner; (D) the election is made with a timely filed return and, as the Secretary^* requires, lists each partner’s name and taxpayer^* identification number; and (E) the partnership notifies each partner as the Secretary requires.

(2) Special rules. (A) For an S-corporation partner, the partnership meets paragraph (1)(C) only if it discloses, as the Secretary requires, the name and taxpayer identification number of every person to whom the S corporation must furnish a statement under section 6037(b) for the relevant S-corporation year. Those S-corporation statements count as partnership statements for paragraph (1)(B). (B) For paragraph (1)(D)(ii), the Secretary may allow alternative identification of foreign partners. (C) By regulation or other guidance, the Secretary may make similar rules for other partners not described in subparagraph (A) or paragraph (1)(C).