The new regulations (BBA Regulations) introduced under The Bipartisan Budget Act of 2015 are expected to make it easier for the Internal Revenue Service (IRS) to audit private funds structured as partnerships. Consequently, advisers to these funds should proactively take steps to understand how the BBA Regulations differ from the current partnership audit rules and amend their fund operating documents accordingly. Baker Tilly Virchow Krause recently offered a comprehensive overview of the BBA Regulations and practical ways for managers to address those changes, in a panel moderated by Mark Heroux, principal at Baker Tilly and former trial attorney in the IRS Office of Chief Counsel, and featuring Colin Walsh and Brad Polizzano, Baker Tilly senior manager and manager, respectively. This second article in our two-part series discusses the treatment of underpayments under the BBA Regulations and the option for partnerships to push out the adjustment to those who were partners during the year that was under review; the application of Accounting Standards Codification 740 to partnerships; the ways in which most managers will need to update their partnership agreements; and the effect of the BBA Regulations on the filing of state tax returns. The first article provided an overview of the BBA Regulations, identified key ways in which the BBA Regulations differ from existing partnership audit regulations and explained the new concept of a “partnership representative.” For a comprehensive look at hedge fund taxation, see our four-part series: “Allocations of Gains and Losses, Contributions to and Distributions of Property From a Fund, Expense Pass-Throughs and K-1 Preparation” (Jan. 16, 2014); “Provisions Impacting Foreign Investors in Foreign Hedge Funds” (Jan. 23, 2014); “Taxation of Foreign Investments and Distressed Debt Investments” (Jan. 30, 2014); and “Taxation of Swaps, Wash Sales, Constructive Sales, Short Sales and Straddles” (Feb. 6, 2014).