Form 8986: Your Share of a Partnership Audit Adjustment

This page follows the IRS Instructions for Form 8986 (Rev. December 2024), current as of October 2026.

The audit rules behind Form 8986

The Bipartisan Budget Act of 2015 (BBA) created a centralized partnership audit regime that replaced the old TEFRA procedures. It generally applies to tax years beginning on or after 1 January 2018. Under the BBA, adjustments are made at the partnership level, and the partnership either pays an imputed underpayment itself or pushes the adjustments out to the partners. Form 8986 is the push-out document, filed with the IRS along with the transmittal Form 8985.

The terms you'll see on the form

Term	What it means
Reviewed year	The partnership's tax year that the adjustment relates to
Adjustment year	For an audit, the year the court decision became final or the final partnership adjustment was mailed or waived; for an AAR, the year the AAR was filed
Reporting year	Your tax year that includes the date the partnership furnished Form 8986 to you
First affected year	Your tax year that includes the end of the partnership's reviewed year
Imputed underpayment (IU)	The tax amount figured at partnership level under sections 6225, 6226 and 6227
Partnership representative	The person who acts for the BBA partnership, through a designated individual if the representative is an entity

When partnerships must send it

• Audited partnership that elected to push out: furnish Forms 8986 to partners and submit them with Form 8985 no later than 60 days after the adjustments are finally determined. Missing that date can leave the partnership liable for the imputed underpayment.
• Corrections: an audited partnership can send corrected Forms 8986 within 60 days of the original due date without permission; after that it has to contact the IRS.
• AAR partnership: furnishes Forms 8986 to all partners and includes them with the AAR, along with Form 8985.
• Pass-through partners: by the extended due date of the audited or AAR partnership's adjustment year return.

Each reviewed year needs its own Form 8986, and the partnership's name and taxpayer number must match the Form 8985 exactly.

If you receive a Form 8986

You are	What you do
An individual or other non-pass-through partner	Report the figures on Form 8978 and attach it to your reporting year return
A pass-through partner such as a partnership, S corporation, trust or estate	Either push the adjustments to your own owners on Forms 8986 with Form 8985, or figure and pay an IU and submit Form 8985

For a pass-through partner, one of those two options has to be done by the extended due date of the audited partnership's adjustment year return. Miss it and you can be liable for an IU yourself, plus penalties and interest.

The insight: you can stop the interest early

Interest runs on these adjustments, and partners who'll report them on Form 8978 can pay in advance to stop it. The instructions list EFTPS, debit or credit card, or Direct Pay for Form 1040 filers, choosing Prepayment on BBA AAR/Exam Push Out as the payment type. If an 8986 lands in your mailbox months before you'll file the reporting year return, a prepayment is worth weighing up with your adviser.

What changed on the current revision

The column headings in Part V were changed and an as corrected column was added, so the figures in columns (f), (g) and (h) aren't the same as on the older version. If you're comparing an old Form 8986 with a new one, read the column headings first.

Practical points for submission

• A fax number in the instructions is only for Forms 8985 and 8986, and anything else sent to it won't be processed.
• A Form 8985 and 8986 package over 100 pages has to be printed and mailed.
• Item D, the reviewed year end date, is a required field, as are Items A, C and E.

Adjustments that don't create a tax bill

Not every adjustment on a Form 8986 means more tax. The instructions explain that an adjustment doesn't result in an imputed underpayment when netting within its grouping comes to zero or less, and that adjustments to items that aren't monetary, such as an election the partnership made, never result in one. An AAR partnership whose adjustments don't produce an IU still has to furnish Forms 8986 to all its partners, so you can receive one that changes how items are reported without adding tax.

The verdict

Form 8986 looks like a request to reopen an old year, but for most partners it isn't: the adjustment is reported now on Form 8978 with the current year's return. The partnership's own filings, such as its Form 1065 for the reviewed year, stay as they were; the audit result travels through Forms 8985 and 8986 instead. Read the reporting year carefully, check the figures against your Schedule K-1 for the reviewed year, and if you're a pass-through entity yourself, decide quickly whether to push out or pay, because that deadline is tied to the partnership's return, not yours.

Frequently asked questions

What is Form 8986?

It's the statement a BBA partnership uses to furnish and transmit each partner's share of adjustments to partnership-related items after an audit or an administrative adjustment request.

What do I do with a Form 8986 as an individual partner?

Report the information on Form 8978, Partner's Additional Reporting Year Tax, and attach it to your reporting year tax return.

When must a partnership send Form 8986?

An audited partnership that elects to push out must furnish and submit them no later than 60 days after the adjustments are finally determined.

Do I amend my old return when I get Form 8986?

Not under the BBA push-out process; non-pass-through partners report the adjustments on Form 8978 for the reporting year.

Can I pay early to stop interest on a Form 8986 adjustment?

Yes. Partners can prepay by EFTPS, card or Direct Pay, choosing Prepayment on BBA AAR/Exam Push Out as the payment type.