Video instructions and help with filling out and completing Will Form 1065 Schedule M 3 Transaction

Instructions and Help about Will Form 1065 Schedule M 3 Transaction

This session is on a schedule k-1 form 1065 you'll find the information on this return and its use in tax layer is different than than what we did with the form 1041 a lot of that is due to the way tax layer handles this at this point in time the form 1065 reports a partner's share of income distributions deductions and credits as part of a partnership our clients we don't see too much of this but the some of our clients may have investments in sometimes oil pipelines or other kinds of energy projects that they may that their brokers have recommended for them as part of it their investment strategy a lot of times our clients don't understand the added complexity that having this investment means to their tax return and that sort of thing but if they have a k1 there is a question on the intake interview us you can check a lot of times you might not see this mark but they'll actually have the k1 form there for you to view one of the key points to consider right away is is this investment part of an IRA if it is you don't have to enter it at all in the tax return just like you would not enter IRA investments on a return so you can ignore it completely and they'll usually say that at the top of the k1 if it's part of an IRA the second thing of course you've got to consider is any of the information on the k1 does it put it out of scope for us and we'll talk about that a little bit more here's any sample of a k1 form 1065 usually it will have the tax year on here if the fiscal year is different they'll have a from and to date and the to date should end in 2021 to be relevant for this year's return and I'll talk about the name and tax ID of the partnership and then they should have the taxpayer or spouse's name here indicating who's receiving this I didn't fill out information here sometimes they'll have percentages of ownership and that can be entered when you get to the state return you can enter that information but you can see a bunch of different fields here the ones we have filled in are ones that we can deal with in our program they are interest income ordinary dividends qualified dividends royalties net short-term capital gain or loss net long-term capital gain or loss and tax-exempt interests and far in this is foreign tax paid Ellen LNM our foreign tax paid now additionally if there's something you sometimes see something in box 19 we can you can really just ignore that if there's something there you can still go ahead and do the return and if you have something in 18 C you can ignore that as well also 16 a b c and d you could ignore that few have values in there you can still do the return now 13 and 15 if there's values in those blocks we can do the return if the client agrees that we not - that they don't need to be entered into the return those blocks are actually reductions of income so it could hurt the client if they're not entered but if they're very immature in material amounts you could say to them we can ignore 13 and 15 just exclude that as long as you're okay with it you know if it's $20 or $30 it might they might say well I'd have to pay two or three hundred dollars to go to a tax preparer to do that and I'm willing to just let you guys do it without without including it another thing that you'll have to answer a question is the activity on this k1 partnership is it passive and that means that the taxpayer spouse did not materially participate in the business for example if the partnership is say a restaurant and the taxpayer is a chef at the restaurant he's definitely material materially participating in the partnership and we probably won't be able to do his return he should be going to a paid preparer in that case most of our people are again it's a passive activity they made up an investment or their broker has made an investment for them and they just hopefully make money on it or a tax benefit but this so it's typically a passive activity that we're dealing with and there's another question is the investment at risk that means if the partnership doesn't do well will they not do well either and generally the answer is yes if the partnership loses money they won't make money either so it's usually passive and all investment is at risk now here's some of the fields from the k1 that we just looked at you can enter all of these in tax layer in the 1065 portion of text layer so let's go there we go to income other income and then we go to less common income k1 earnings and you'll see it gives us a choice we have a 1065 and they'll ask you to enter basic information about the partnership which will be on the k1 that's the top part and then down below here's where is this a passive entity all investments at risk sometimes this question will be on the k1 as well is that a publicly traded partnership that possibly maybe checks so look on the k1 for that and then you go as you continue to go through that screens you'll see box 5 6a 6b 7 8 9 a those are the fields were allowed to work with we talked about 13 again if they agree not to include any of these things in the return we can continue if they insist that it be filled.