The Journal of Passthrough Entities (CCH): “This column has three focal points: S corporations (of course!), the new partnership audit procedures and Jeanne Dixon. Yes, that Jeanne Dixon—the self-professed psychic who claimed to have predicted the assassination of President Kennedy, met with Presidents Roosevelt and Nixon and for a time was one of Nancy Reagan’s astrologers.1 What is Jeanne Dixon doing in this S Corporation Corner? Well, it is about predicting the future. And it is about making enough predictions based on educated guesses that one or two of them may actually come true—or at least close enough to claim they came true.”
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.”