SECTION 8. REPORTING

REQUIREMENTS

.01 Initial Filing Requirement . A partnership must file an abbreviated Form 1065, U.S. Return of Partnership Income, for the first taxable year during which the monthly closing election was in effect. The abbreviated Form 1065 must be filed by the date that the partnership’s income tax return for that taxable year would ordinarily be due and must be signed by a person with the authority to sign the partnership’s Form 1065. The words “Filed in Accordance with Rev. Proc. 2003–84” must be typed or printed across the top of the form. The partnership is required to provide only the following information on the abbreviated Form 1065:

(1) A statement that the partnership has made an election under this revenue procedure to which all present and future partners consent;

.03 Expense test . Substantially all of the partnership’s expenses and deductions (computed without regard to items described in section 4.04 of this revenue procedure) are properly allocable to:

(1) producing, collecting, managing, protecting, and conserving the income described in section 4.02(1), (2), or (3) of this revenue procedure or the assets generating the income;

(2) acquiring, managing, conserving, maintaining, or disposing of property held for the production of the income described in section 4.02(1), (2), or (3) of this revenue procedure; and

(3) servicing the equity in the partnership.

.04 Exclusion . For the purposes of sections 4.02 and 4.03 of this revenue procedure, reasonable amounts charged to persons requesting information from the partnership under section 8.03 of this revenue procedure and the costs of collecting, managing, computing, and supplying the information are not taken into account.

.05 Test Dates and Test Periods . The income test described in section 4.02 of this revenue procedure and the expense test described in section 4.03 of this revenue procedure must be satisfied both as of the first day of the first month for which the partnership’s monthly closing election is effective (the election test date) and, beginning with the fourth month after the partnership’s monthly closing election becomes effective, on the last day of each month (the operational test date). The partnership determines whether the income test and the expense test are satisfied as of the election test date by reference to the election test period. The partnership determines whether the income test and expense test are satisfied as of each operational test date by reference to the operational test period. In applying the income and expense tests for a test period, a termination of the partnership under § 708(b)(1)(B) during that period is ignored.

(1) The Election Test Period . The election test period differs depending upon how long the partnership has been in existence (determined from its start-up date). A partnership’s start-up date is the later of the date the entity had more than one owner and the date the entity had more than a de minimis amount of assets.

(a) If, on the election test date, the partnership has been in existence for at least 6

full calendar months, then the test period is the longer of the 6 full calendar months preceding the election test date and the portion of the partnership’s taxable year that precedes the election test date; and

(b) If, on the election test date, the partnership has not been in existence for at least 6 full calendar months, then the election test period is the first 6 full calendar months of the partnership’s existence.

(2) The Operational Test Period . The operational test period is the 3-calendarmonth period consisting of the calendar month within which the operational test date falls and the preceding 2 calendar months.