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Subject Author Date
urgent ...pls help.. US tax issue ritagoldman101 12-12-2006
Posted by Steve Pope on December 17, 2006, 6:40 pm
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>>> 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

>> 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.

It seems to me that if both are working at the business,
you need to file a partnership return regardless of whether
you are in a community property state, otherwise you may
be evading self-employment tax, and you definitely are
not correctly reporting self-employment taxes.

Steve

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<< that may be imposed upon the taxpayer. >>
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Posted by Mike Wellman on December 15, 2006, 10:24 am
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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 ?

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. >>
<< ======================================================= >>

Posted by Harlan Lunsford on December 16, 2006, 8:58 pm
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Mike Wellman wrote:
> 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.

Why Sschedule C if they were conducting business as a
partnership?

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. >>
<< ======================================================= >>

Posted by Herb Smith on December 16, 2006, 8:58 pm
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Mike Wellman wrote:
> 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.

Not necessarily, unless they live in a community-property
state. In most states, a partnership return is correct for a
family business.

<< ======================================================= >>
<< 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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