7733 / What is an electing large partnership?

Certain partnerships may elect to be treated as electing large partnerships. An electing large partnership generally has fewer separately stated items of income, gain, loss, deduction, and credit than partnerships that are not electing large partnerships. See Q 7732 generally.¹ The electing large partnership provisions were enacted in part to ease the reporting requirements of limited partners.² An electing large partnership is subject to the regular partnership rules (see Q 7732 to Q 7767) except to the extent that the regular rules are inconsistent with the electing large partnership rules.³ A publicly traded partnership could not be an electing large partnership unless it is an electing 1987 partnership. See Q 7728.

An electing large partnership is a partnership that had at least 100 partners in the previous taxable year and that elects to be treated as an electing large partnership. To the extent provided in regulations, a partnership shall cease to be treated as an electing large partnership if the number of partners falls below 100 during a taxable year. The election to be treated as an electing large partnership applies to the taxable year for which it is made and all subsequent years. The election may be revoked with the consent of the IRS.

For purposes of determining the number of partners, those partners performing substantial services for the partnership, or individuals who performed services in the past at the time they were partners, will not be counted toward the 100 partners needed to elect. Also, an election to be treated as an electing large partnership will not be effective with respect to a partnership if substantially all the partners are performing substantial services for the partnership or are personal service corporations (the owner-employees of which perform such substantial services), are retired partners who performed substantial services in the past, or are spouses of partners who are or were performing substantial services for the partnership. A partnership the principal activity of which is the buying and selling of commodities, or options, futures, or forwards with respect to commodities, may not elect large partnership status.⁴