Multiple partnerships filed as Sch C for multiple years

Technical topics regarding tax preparation.
#21
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DavidG wrote:Perhaps they intended to file as a "qualified joint venture"-see IRC 761(f) and the Sch C instructions and therefore Form 1065 is not required. The facts don't indicate how they split the income and how they filed Schedule SE.


In truth, they did not intend anything in particular. They filed the SS-4 themselves, based on what they considered a good idea, namely them both being co-owners, with no regard to the ramifications of different entity structures.
 

#22
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ManVsTax wrote:
ThatTaxGuy wrote:all were setup as partnerships with the IRS (I requested the SS-4 to confirm) .


An SS-4 does not establish a tax status. So, I wouldn't give that too much consideration.

Regarding posts #2 and #3 and #4, an LLC taxed as a partnership cannot operate as a QJV.

Rev Proc 2002-69 is your best bet and may be your saving grace. Especially if the clients and LLC are based in FL, a community property state.


ManVsTax, I'm not sure if you helped me out this with in a different thread. I had another issue with a fiscal year end on an SS-4 for an estate, and it was pointed out to me that the filing date is not determined by the SS-4, but what is shown on the first tax return.

My early training in the field always taught me that you go by what the SS-4 says, so it's been interesting to learn that there is a different perspective on this.

I did read an interest Tax Adviser article on 2002-69, and indeed, they are in FL, and Florida is not a community property state, but the article was interest none-the-less.
 

#23
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Noobie wrote:Jeff, that's a great idea until you have the IRS come back 6 years later asking for the 1065 like a client of mine just did.


This was exactly my concern, and the main reason I created this thread. Although I have a new perspective after reading the replies, my main concern was continuing to file the returns as they had been in the past, then the client gets a notice and they blame me for not correcting them going forward.
 

#24
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Jeff-Ohio wrote:
Jeff, that's a great idea until you have the IRS come back 6 years later asking for the 1065 like a client of mine just did.

Nope, sorry.

We called the number on the notice, explained what happened and she was told to file 1120-S's going forward. No penalties.

Exactly.

Probably best to do as Jeff suggests and deal later with any notices.

Exactly again.

Don’t lose sight of the big picture here. We are dealing with an INCOME tax system. If all the income got reported and ended up in the right place, that’s good enough.

Things are a little different nowadays, because IRS can assess against the partnership, but even then, it would be easy to make your case.

They have been self preparing their tax returns

Very often, the worst clients to have. I would have gone into that initial meeting expecting the worst


I think this is exactly how I am going to handle it...assuming the "potential" clients call me back. Yep, after a couple of conversations he ghosted me. Shocked pikachu face. I know...I know...but I still feel I learned something from this thread.
 

#25
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From a technical standpoint, RP 84-35 would relieve any late filing penalties in this situation, assuming the 1040s were filed timely.
~Captcook
 

#26
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CaptCook wrote:From a technical standpoint, RP 84-35 would relieve any late filing penalties in this situation, assuming the 1040s were filed timely.


Yeah, I've thought about that. My main concern is opening the can of worms that doesn't need to be. I would hate to file the returns, have them get hit with penalties, and not be able to get them abated.

Don't get me wrong, if they ever come back I will do what needs to be done. The point of this thread was to see what the options were, and I think I received some good ones.
 

#27
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To me, this is an argument to leave well enough alone. There's no value to "opening the can of worms". All penalties for doing it wrong would be removed.
~Captcook
 

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