Unwary partnerships could face steep fines this year as a result of a new addition to the partnership tax filing form.
The new instructions for Form 1065 include an under-the-radar requirement to disclose a negative capital balance, which is essentially the money partners would receive if the partnership was liquidated, if it’s not already on the partner’s K-1 form. The requirement could draw closer Internal Revenue Service scrutiny of a tax-planning scheme some partners may not be aware is still on the books.
If partnerships miss the requirement—which is on page 30 of a 55-page document, they could face penalties ...
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