Form 1065-X Amended Return or Administrative Adjustment Request (AAR) Tax Year 2018 Paper-Filing Checklist
The 2018 Form 1065-X marked the transition year when partnerships filing returns for tax year 2018 could first elect into the Bipartisan Budget Act (BBA) centralized audit regime (sections 6221–6241), moving away from the Tax Equity and Fiscal Responsibility Act (TEFRA) procedures that governed pre-2018 partnership returns. Prior to January 1, 2018, partnerships were subject to TEFRA unified audit rules; 2018 forward required designated partnership representatives and imputed underpayment calculations specific to BBA. Form 1065-X therefore contains two separate procedural pathways: Section 1 (TEFRA/NonTEFRA Determination) for pre-2018 returns being amended, and Section 2 (BBA AAR) for partnerships electing into or automatically subject to BBA for tax years beginning after 2017.
No year-specific programs (such as Coronavirus Aid, Relief, and Economic Security Act retroactive depreciation amendments or Economic Impact Payment reconciliation) appear in the 2018 Form 1065-X instructions. The form does not incorporate above-the-line charitable deductions, stimulus payment lines, or other temporary 2020–2021 relief provisions. The 2018 tax year predates all such amendments.
Ten-Step Filing Checklist
Step 1: Verify Partnership Classification and TEFRA/BBA Eligibility
Determine whether the original Form 1065 return being amended or adjusted was filed for a tax year beginning before January 1, 2018, or on or after January 1, 2018. If the return is for a tax year beginning before January 1, 2018, and the partnership did not elect into BBA, answer questions B, C, and D in Section 1 of Part I. Question B requires confirmation that the partnership had 10 or fewer partners at all times during the tax year (counting a married couple as one partner for TEFRA purposes). If this threshold is exceeded, the partnership cannot file an amended return via Form 1065-X; it must pursue alternative procedures.
Step 2: Confirm Partner Composition and Eligibility for TEFRA Treatment
Answer Question C in Section 1 of Part I. Confirm that at all times during the partnership’s tax year, all partners were U.S. citizens, resident aliens, C corporations, or estates of deceased partners. If any disqualifying partner types were present (such as a trust, S corporation, LLC, or foreign entity), the partnership is not eligible for TEFRA treatment and cannot file an AAR under TEFRA procedures via Form 1065-X. Consult Form 8893 (Election of Partnership Level Tax Treatment) if the partnership wishes to elect TEFRA treatment for an earlier tax year.
Step 3: Determine TEFRA/NonTEFRA Status and Select Filing Route
Review the answers to Questions B and C. If both answers are yes, the partnership is not subject to TEFRA procedures and cannot file an Administrative Adjustment Request (AAR); it may only file an Amended Return by checking the “Amended Return” box in Question F. If either answer is no, or if Question D reflects a prior TEFRA election, proceed with TEFRA AAR procedures. Do not proceed with Form 1065-X if the partnership is subject to BBA procedures and filed its original return for a tax year beginning after December 31, 2017; such partnerships must use Section 2 (BBA AAR) or consult Form 8082 for electronic filing.
Step 4: Complete Part I (Classification and Election) and Identify Required Attachments
In Part I, check only one box: TEFRA AAR, NonTEFRA, ELPs/REMICs, or (for 2018 and later tax years) BBA AAR. If answering TEFRA AAR questions and a new partnership representative is being appointed, attach Form 8979 (Partnership Representative Designation or Resignation). Enter the number of Schedules K-1 being filed with this return (for partnerships and ELPs) or Schedules Q (for REMICs) in the field provided on page 1. If the partnership is not filing amended Schedules K-1 (e.g., because an AAR does not create amended K-1 distributions), enter zero.
Step 5: Complete Part II (Income, Deductions, Credits, and Other Items)
For each line item being amended or adjusted, enter a description in column (a), the amount as originally reported or previously adjusted in column (b), and the net increase or decrease in column (c) using parentheses for all decreases. Add columns (b) and (c) to produce the corrected amount in column (d). Line 12 includes Section 179 deduction; line 13 incorporates contributions, investment interest expense, section 59(e) expenditures, and other deductions; lines 15a–15f detail credits for low-income housing, rehabilitation, rental real estate, and other categories; lines 17a–17f capture alternative minimum tax (AMT) adjustments. Do not enter a line item if no amendment is required; leave it blank.
Step 6: Gather Supporting Documentation and Schedules
Obtain the partnership’s original Form 1065 (or 1065-B for ELPs, or 1066 for REMICs) for the reviewed tax year. For each amended item, gather supporting schedules and calculations. If the corrected amount involves an item of income, deduction, or credit that required a schedule or statement on the original return, attach the amended schedule with the original form marked “Copy Only—Do Not Process” at the top. If the partnership is applying for modification of an imputed underpayment under BBA section 6225(c), attach Form 8980 (Partnership Request for Modification of Imputed Underpayments Under IRC Section 6225(c)).
Step 7: Complete Part III If Applicable (ELPs and REMICs Only)
If filing for an Electing Large Partnership or REMIC, do not use Part II. Instead, complete Part III using the same column structure: description (a), as originally reported (b), adjustment (c), and corrected amount (d). For ELPs, calculate total tax on line 10, then determine line 11 (amount of tax due). For REMICs, add lines 7 through 9 for total tax. Do not furnish amended Schedules K-1 or Schedules Q to partners or residual interest holders if this is an AAR; if filing an amended return (not an AAR), furnish amended Schedules Q to all residual interest holders.
Step 8: Complete Part IV (Imputed Underpayment, if Applicable) and Part V (Explanations)
If the partnership is subject to BBA and the adjustments result in an imputed underpayment for the reviewed year, enter the amount on Part IV, line 1, and compute the total amount due on line 2. Include a detailed explanation for each line item being changed in Part V, stating what was incorrect, why it was incorrect, and how the correction was made. Show all computations in detail; if space is insufficient, attach a separate page. Include documentation of how the imputed underpayment was calculated (total netted partnership adjustments multiplied by the highest applicable tax rate for the reviewed year).
Step 9: Sign and Date the Form
The Tax Matters Partner (TMP) for a TEFRA partnership, the Partner with Authority (PWA) for an ELP, or the Partnership Representative (PR) for a BBA partnership must sign and date Form 1065-X manually or via authorized electronic process. Print or type the name and title of the signatory. If a paid tax preparer completes the form, the preparer must also sign in the “Paid Preparer Use Only” section, provide the preparer’s PTIN (not Social Security number), and include the preparer’s firm name and address. A paid preparer may sign the form using a rubber stamp, mechanical device, or computer software program.
Step 10: File the Form and Furnish Required Statements to Partners
Mail Form 1065-X, together with all required attachments (amended Schedules K-1 or Schedules Q, Form 8979 if applicable, Form 8980 if applicable, and supporting schedules), to the Internal Revenue Service Center where the original return was filed. Retain a copy for partnership records. If the partnership is not filing an AAR but filing an amended return, furnish a copy of the amended Schedule K-1 to each partner; do not furnish amended schedules if filing an AAR under TEFRA or BBA procedures. For BBA partnerships filing an AAR under section 6227(b)(2) that elect to push out adjustments, furnish Form 8986 (Partner’s Share of Adjustments) to each reviewed-year partner instead of amended K-1s.
2018 Form 1065-X Procedural Changes from Prior Years
• Designation of Tax Matters Partner
● Prior Instruction: Designation of Tax Matters Partner appeared on page 3 of prior-year forms and was required for all TEFRA partnerships filing amended or AAR returns.
● Current 2018 Instruction: For tax years beginning before January 1, 2018, the Tax Matters Partner must still sign Form 1065-X; however, beginning in 2018, partnerships electing into or automatically subject to BBA must instead designate a Partnership Representative (PR) on the original Form 1065 filed for the reviewed year. Form 1065-X must be signed by the PR for BBA partnerships or the TMP for TEFRA partnerships.
● Change Type: Clarified
• Part I Structure
● Prior Instruction: Part I previously contained only TEFRA/NonTEFRA determination questions (A–F) applicable to all partnerships.
● Current 2018 Instruction: Part I now contains two distinct sections: Section 1 for TEFRA/NonTEFRA determination (for pre-2018 returns) and Section 2 for BBA AAR (for 2018 and later returns or earlier returns if a BBA election was made). Partnerships must identify which section applies based on the tax year being amended.
● Change Type: Redesigned
• Schedule K-1 Additions
● Prior Instruction: Schedule K did not include a separate line for dividend equivalents or questions related to section 163(j) business interest limitation or section 721(c) foreign partnerships.
● Current 2018 Instruction: Schedule K-1 now includes line 6c for dividend equivalents, and the Form 1065 adds questions 23 and 24 requiring disclosure of section 163(j) and section 721(c) partnership status. Form 1065-X, therefore, must reference these items if being amended.
● Change Type: Added
Form 1065-X Limitations For 2018 Tax Year
The 2018 Form 1065-X instructions do not reference or apply Economic Impact Payment (stimulus) reconciliation, CARES Act depreciation amendments, enhanced child tax credit, recovery rebate credit, above-the-line charitable deduction, or any other 2020–2021 temporary relief provisions. These rules did not exist in tax year 2018 and are not included in the 2018 form instructions.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
