IRS Form 1065 – U.S. Return for Partnership
A partnership must be an association of two or more taxpayers with the objective of making a profit.
A business operated as a partnership is not recognized as a taxable entity under the income tax laws. Instead, the partner divides the income and expenses of the business and report their share on individual returns.
The income taxed to the owners regardless of distributions.
|When to File?||By the 15th day of the 3rd month following the date its tax year. For calendar-year partnerships, the due date is March 15. For 2019 return it’s March 16, 2020.|
|Extension for Filing||Form 7004 is to request an extension of time to file.|
|Recordkeeping||The partnership must usually keep records that support an item of income, deduction, or credit on the partnership return for 3 years from the date the return is due or is filed, whichever is later.|
Below are the parts of Form 1065:
|Deduction (trade or business activity deductions)||
|Schedule B||It asks “other information” related to the type of entity filing return, ownerships, partnership’s debt, partnership’s interest and many other information.|
||It shows information of partnership and their partners, like the taxable income of partners, qualified dividend, net capital gains, income from other activities, deduction or loss.|
|Schedule L||Balance Sheet per Books for beginning and end of the Tax year.|
|Schedule M-1||It’s Reconciliation of Income (Loss) per Books With Income (Loss) per Return. Reconciliation needed as the rules of income tax is different from bookkeeping.|
||It’s an analysis of “Partner Capital Accounts” which includes the opening balance, contribution, income (loss), distribution, other increases or decreases.|