The Journal of Passthrough Entities (CCH): “This column has three focal points: S corporations (of course!), the new partnership audit procedures”
The author of this article makes three predictions. His prediction number 2 deals with partnership agreements and operating agreements of LLCs taxed as partnerships. He predicts:
Some partnership agreements will be revised and some new ones drafted to require S corporation partners to provide annually to the partnership an accurate list of the names and TINs of the S corporation’s shareholders (i.e., the persons to whom the S corporation is required to issue Schedules K-1 for the year).
Corollary: Some partnership agreements will provide that S corporation partners must indemnify the partnership and its other partners against either: (i) partnership-level income taxes the partnership is required to pay but could have avoided had the S corporation provided the information necessary for the partnership to elect out of the entity-level audit provisions on a timely basis, or (ii) the costs to the partnership of making an election under new Code Sec. 6226.”