M3BBA: Partnership Audit Report (2024)
Minnesota · Minnesota DOR · Used for tax years 2024
Minnesota Form M3BBA, Partnership Audit Report, reports federal adjustments for a reviewed year and allocates them among partner groups. It calculates Minnesota tax on those adjustments for entry on Form M3X and includes a schedule of nonresident indirect partners.
Who files this form
Use Schedule M3BBA only if your partnership elects to report and pay Minnesota tax at the partnership level after a federal BBA centralized partnership audit produces adjustments affecting Minnesota tax liability. File it with Form M3X, Amended Partnership Return.
If the audited partnership does not make this election, a tiered partnership partner may choose to make it as an electing partnership.
Your partnership cannot make this election if:
- The federal adjustments result in unitary business income to a corporate partner required to file as part of a combined report.
- Any final federal adjustments result from an administrative adjustment request.
- The partnership has no Minnesota reporting or payment obligations.
When it's due
For the tax year 2024 M3BBA, the printed instructions give deadlines measured from the federal audit change’s final determination date:
- File Form M3X and Schedule M3BBA: No later than 90 days after that date.
- Pay the partnership-level tax: No later than 180 days after that date.
For an IRS audit, the final determination date generally means the first day no federal adjustment from that audit remains to be finally determined, whether by agreement or a final decision after appeal rights are waived or exhausted.
What you'll need
Have these forms and details ready:
- Form M3X, which must accompany Schedule M3BBA.
- Federal partnership audit report, including federal Form 15027 and Form 886-A, which must be attached.
- The reviewed year’s beginning and ending dates, partnership names, federal ID numbers, and Minnesota Tax ID numbers.
- Federal adjustment amounts and the partners’ distributive shares, partner types, and residency or domicile information.
- Your corrected Form M3A for the reviewed year, including the apportionment percentage on line 5c.
Include these supporting items when applicable:
- An attachment breaking down nonbusiness income reported on line 11.
- Explanations of Minnesota modifications reported on lines 20, 23, 27, and 33.
- Identifiable nonresident indirect partners’ names, tax ID numbers, addresses, residency information, and amounts for Part 9. Attach additional Parts 9 if more than 10 such partners are identifiable.
How to file
- Complete Schedule M3BBA for the reviewed year. If the federal audit covers multiple tax years, use a separate M3BBA for each reviewed year and file it with that year’s Form M3X.
- Complete the federal adjustments, partner allocations, Minnesota income, and tax calculations. Transfer the total tax from line 38 to line 5 of Form M3X.
- Attach the federal partnership audit report and other required supporting explanations.
- Have the state partnership representative sign Schedule M3BBA.
- File Schedule M3BBA as a supplemental schedule with Form M3X.
The supplied text does not give a mailing address or e-file method for filing M3BBA with M3X.
Common mistakes
- Filing M3BBA without making the election. Only file it when electing to pay the federal audit changes at the partnership level.
- Incorrect partner allocations. Carry lines 6 through 10 to five decimal places. Line 10 must equal 1.00000. Do not include the same direct exempt partners on both lines 2 and 6.
- Including domicile-assigned income on line 15. The form specifically excludes amounts assignable to the state of domicile.
- Including partner-level tax attributes in modifications. The instructions prohibit these modifications, including net operating loss modifications on line 20.
- Listing unverified nonresident indirect partners. Do not enter a partner in Part 9 or include a related amount on line 31 unless you can determine that the partner is not a Minnesota resident.
- Leaving a separate representative designation unsigned or undated. It is not valid until signed and dated by someone with legal authority to sign for the partnership.
Questions people ask
What is the reviewed year?
It is the partnership’s taxable year subject to the partnership-level audit that produced the federal adjustments.
Does the election replace partners’ separate reporting of the adjustments?
Unless a partner is excluded from the calculation by Minnesota statute, the partnership-level election relieves that partner from filing a return to report their share of the federal adjustments.
Who signs Schedule M3BBA?
The state partnership representative must sign. This is the federal partnership representative unless the partnership designates someone else using page 4.
Can the partnership make estimated payments while an IRS audit is pending?
Yes. If the partnership plans to elect partnership-level payment, estimated payments should be made under the partnership’s Minnesota ID number. The text directs filers to the M3X instructions for payment details.
What happens if the partnership does not make the election?
The partnership and each partner must file amended Minnesota returns for the reviewed years and report their shares of the federal adjustments. A tiered partnership partner may instead choose to make its own partnership-level election.