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I formed an LLP and am trying to file a 1065 to generate a K1. The LLP was created to collect investments from people and pass them along to a larger entity. We technically made no sales, and technically have no expenses. How should I represent this?
AI accountant’s answer:
Since you're filing Form 1065 for your LLP, you'll need to report the partnership's financial activity, even if there were no sales or expenses in the tax year. Here's a general outline of how to represent this situation on Form 1065 and the related Schedules: 1. Start by completing the basic information about your LLP at the top of Form 1065, such as the name of the partnership, address, and EIN. 2. On Part I - Income, report "0" or any other applicable amounts for lines 1 through 7. 3. On Part II - Deductions, report "0" or any other applicable amounts for lines 8 through 21. 4. On Schedule B - Other Information, answer the questions as they apply to your LLP. 5. On Schedule K - Partners’ Distributive Share Items, report any income, expenses, credits or other items that need to be allocated among the partners. Since you mentioned no sales and no expenses, most of these lines could be "0" or the applicable amount. 6. Complete Schedule L - Balance Sheet, to represent your partnership's assets, liabilities, and capital at the beginning and end of the tax year. 7. Complete Schedule M-1 - Reconciliation of Income, if there are any differences between the financial accounting and tax reporting of your partnership's income. 8. Fill out Schedule M-2 - Analysis of Partners' Capital Accounts as applicable. 9. Lastly, prepare a Schedule K-1 for each of the partners to report their allocable share of partnership income, deductions, and credits. Remember to maintain adequate financial records and document all investments and transactions associated with your LLP. Since the tax situation of each partnership can vary significantly, I recommend consulting a tax professional who can review your specific circumstances and help you file your Form 1065 correctly.
Comment from reviewer
Ieva Ivanauskas, EA
Not Correct.
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