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(A) In general.--Except as provided in
subparagraph (B), the term “partnership” means any
partnership required to file a return under section
6031(a).
(B) Exception for small partnerships.--
(i) In general.--The term “partnership”
shall not include any partnership having 10 or
fewer partners each of whom is an individual
(other than a nonresident alien), a C corporation,
or an estate of a deceased partner. For purposes
of the preceding sentence, a husband and wife (and
their estates) shall be treated as 1 partner.
(ii) Election to have subchapter apply.--A
partnership (within the meaning of subparagraph
(A)) may for any taxable year elect to have clause
(i) not apply. Such election shall apply for such
taxable year and all subsequent taxable years
unless revoked with the consent of the Secretary.
Congress enacted the small partnership exception of section
6231(a)(1)(B) to ensure that only “simple” partnerships would be
excepted. See McKnight v. Commissioner, 99 T.C. 180, 185 (1992),
affd. 7 F.3d 447 (5th Cir. 1993); Hearings on H.R. 6300 Before
the House Comm. on Ways and Means, 97th Cong., 2d Sess. 259-261
(1982) (describing “simple” partnerships as those whose partners
“treat themselves as co-ownerships rather than partnerships, and
each co-owner resolves his own tax responsibilities separately as
an individual with the IRS”).
For the years at issue, the temporary regulations issued
under section 6231 required that the election provided for in
section 6231(a)(1)(B)(ii) be made by attaching a statement to the
partnership return for the first taxable year for which the
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