Limited Partnership Given More Time to Elect Real Property Trade or Business Status

Businesses that don’t qualify as small businesses (in 2025 it means having average annual gross receipts in the 3 prior years not exceeding $31 million) are subject to a limitation on deducting interest payments. But a real property trade or business can elect to not be subject to the limit by attaching an election statement—Form 8990—to a timely filed original tax return. In one situation where the tax professionals handling returns for a limited partnership filed to attach a statement despite expectations that it was done, the IRS granted more time to do so. The limited partnership acted in good faith and granting the extra time did not result in the partners in the limited partnership having a lower tax liability for the tax year at issue than would have resulted if the election had been made timely. Note: See Q&A 6 in IRS FAQs on what must be included in an election statement. #IdeaoftheDay