How to file a Partnership Technical Termination Election October 2019 Tax News

Assembly Bill 91, Loophole Closure and Small Business and Working Families Tax Relief Act of 2019 (AB 91), passed on July 1, 2019. AB 91 conforms to certain changes to federal income tax law under the Tax Cuts and Jobs Act (TCJA). AB 91 also added California Revenue and Taxation Code (R&TC) Section 17859 which conformed to the TCJA's repeal of the technical termination rules for a partnership.

R&TC Section 17859 applies for taxable years beginning on or after January 1, 2019. However, taxpayers may also elect to apply R&TC Section 17859 for taxable years beginning on or after January 1, 2018 and before January 1, 2019.

If a taxpayer would like to make this election, the taxpayer must:

  1. Include a statement with their original or amended California tax return for the appropriate tax year, stating the taxpayer’s intent to make an election under Revenue and Taxation Code Section 17859(d)(1).
  2. On top of the first page of the original or amended tax return, write or print “AB 91 – Section 17859(d)(1) Election” in blue or black ink
  3. Mail all “AB 91 – Section 17859(d)(1) Election” returns to:
    Franchise Tax Board
    P.O. Box 1570
    Rancho Cordova, CA 95741-1570

Note: The taxpayer must mail their return to this address even if they are required to file electronically (e-file) to ensure proper handling. If a taxpayer has an e-file requirement, the taxpayer may file a paper return for the purposes of making the election and shall also include a statement with the return stating that the taxpayer is filing a paper return in lieu of an electronic return pursuant to FTB Notice 2019-04.