Eligibility to Opt Out

Your club can opt out of the Centralized Partnership Audit Regime (CPAR), if you meet all of the following requirements:

  1. Your club tax return must include less than 100 K-1's total for current and former partners.
  2. Your club only includes members who are:

    • Individuals
    • C corporations
    • Foreign entities that would be treated as a C corporation if they were domestic entities
    • S corporations - (But the number of K-1's they issue is added to the number of K-1's count. Total of both must be less than 100)
    • Estates of any deceased partners
  3. All members have a US Taxpayer Identification number
  4. Your club files its tax return by the regular partnership return due date or extended due date based on a properly filed extension
  5. Your club does not have any members who are:

    • Partnerships
    • Trusts
    • Foreign entities that would not be treated as C corporations were they domestic entities.
    • A disregarded entity described in Regulations section 301.7701-2(c)(2)(i). (example: IRA's)
    • A nominee or other similar person that holds an interest on behalf of another person.
    • An estate of an individual other than a deceased partner.

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