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Posted by ritagoldman101 on December 12, 2006, 2:35 am
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urgent ...pls help..US tax issue
My brother and his wife run a small business. They have been
filing the Partnership form 1065 for years. Never seemed to
have an issue with the IRS
However, now they have received a letter from the IRS asking
them to fill Schedules L, M-1, M-2 of form 1065 etc. They
have never filed these forms before...so they are concerned.
They are worried ..why / what do they have to do here to
fill these forms? and does it have serious consequences?
Can anyone highlight the importance of Schedules L, M-1, M-2
of form 1065 ? and what the info supplied on these forms
are supposed to reveal to the IRS ?
Thanks in advance for any input.
Rita
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Posted by Liz on December 13, 2006, 11:17 pm
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ritagoldman101@yahoo.com wrote:
> urgent ...pls help..US tax issue
>
> My brother and his wife run a small business. They have been
> filing the Partnership form 1065 for years. Never seemed to
> have an issue with the IRS
>
> However, now they have received a letter from the IRS asking
> them to fill Schedules L, M-1, M-2 of form 1065 etc. They
> have never filed these forms before...so they are concerned.
>
> They are worried ..why / what do they have to do here to
> fill these forms? and does it have serious consequences?
>
> Can anyone highlight the importance of Schedules L, M-1, M-2
> of form 1065 ? and what the info supplied on these forms
> are supposed to reveal to the IRS ?
The schedule L of the 1065 is the balance sheet as it is
reflected in your books. You enter the numbers pretty much
as they appear on your balance sheet. Your have to enter the
beginning and the ending of the tax year. There are some
calculations you have to do.
Schedule M-1 is a reconciliation of income/loss per books
with income/loss per return. You might have not much to put
in there. For example, if you had to pay a tax penalty for
filing a return late, you deduct it from your business
(books) but it is not deductible from your tax return. This
is were you reconcile the amounts that you cannot deduct on
your tax return from what you deducted on your books.Some of
the common once are 50% meals deductions, guranteed
payments, accumulated vacation expenses and so on. You can
get some information from the irs website how to fill it
out, but you might need some help doing this.
Schedule M2 is just an analysis of the Partner's captial
accounts. I would suggest that you have your 1065 done at
least once by a professional, so you can see how this
numbers come together. I hope this helps.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Harlan Lunsford on December 13, 2006, 11:17 pm
Please log in for more thread options ritagoldman101@yahoo.com wrote:
> urgent ...pls help..US tax issue
>
> My brother and his wife run a small business. They have been
> filing the Partnership form 1065 for years. Never seemed to
> have an issue with the IRS
>
> However, now they have received a letter from the IRS asking
> them to fill Schedules L, M-1, M-2 of form 1065 etc. They
> have never filed these forms before...so they are concerned.
>
> They are worried ..why / what do they have to do here to
> fill these forms? and does it have serious consequences?
>
> Can anyone highlight the importance of Schedules L, M-1, M-2
> of form 1065 ? and what the info supplied on these forms
> are supposed to reveal to the IRS ?
If you, or they, read the instructions for form 1065, you'll
find the exceptions to having to fill in these schedules, so
probably the partnership didn't meet the requirements not to
use them.
ChEAr$,
Harlan Lunsford, EA n LA
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Mike Wellman on December 15, 2006, 10:19 am
Please log in for more thread options ritagoldman101@yahoo.com wrote:
> urgent ...pls help..US tax issue
>
> My brother and his wife run a small business. They have been
> filing the Partnership form 1065 for years. Never seemed to
> have an issue with the IRS
>
> However, now they have received a letter from the IRS asking
> them to fill Schedules L, M-1, M-2 of form 1065 etc. They
> have never filed these forms before...so they are concerned.
>
> They are worried ..why / what do they have to do here to
> fill these forms? and does it have serious consequences?
>
> Can anyone highlight the importance of Schedules L, M-1, M-2
> of form 1065 ? and what the info supplied on these forms
> are supposed to reveal to the IRS ?
They have a bigger problem. They should never have filed a
partnership return. They should have filed a Schedule C
attached to their Form 1040.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Ira Smilovitz on December 16, 2006, 8:58 pm
Please log in for more thread options > ritagoldman101@yahoo.com wrote:
>> urgent ...pls help..US tax issue
>>
>> My brother and his wife run a small business. They have been
>> filing the Partnership form 1065 for years. Never seemed to
>> have an issue with the IRS
>>
>> However, now they have received a letter from the IRS asking
>> them to fill Schedules L, M-1, M-2 of form 1065 etc. They
>> have never filed these forms before...so they are concerned.
>>
>> They are worried ..why / what do they have to do here to
>> fill these forms? and does it have serious consequences?
>>
>> Can anyone highlight the importance of Schedules L, M-1, M-2
>> of form 1065 ? and what the info supplied on these forms
>> are supposed to reveal to the IRS ?
> They have a bigger problem. They should never have filed a
> partnership return. They should have filed a Schedule C
> attached to their Form 1040.
The above is usually wrong. The only time a husband and
wife can file a Schedule C for a jointly owned business is
when they live in a community property state. Otherwise, a
partnership return is the correct way to go.
Ira Smilovitz
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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