Sched. C should have been filed as 1065

Technical topics regarding tax preparation.
#1
Spock  
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I have a similar situation to a recent post (viewtopic.php?f=8&t=28863) but didn't want to hijack that post and then it would make responses hard to follow for both situations.

Situation:
LLC exists in 2020, 2021, and 2022. Prior preparer for new clients filed only one Schedule C for 2020 and 2021. The EIN letter from 2020 reflects that the LLC is a partnership and should file a 1065, yet no 1065 has ever been filed.

Do you go back and correct by filing a 1065 for 2020, 2021, and 2022 (which has late filing penalties and a host of other potential problems with depreciation) or let it ride as a Schedule C for 2020 and 2021?

They will be filing a 1065 for sure for 2022.

Thank you for your thoughts!
 

#2
sjrcpa  
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Did the LLC have more than one owner?
I've seen plenty of EIN letters for single member LLCs that say file a 1065, but that's because the application was filled out incorrectly.
 

#3
taxcpa  
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Read the membership agreement to determine ownership. Could be a DRE with a single owner as stated above.

If not, look up Rev Proc 84-35 for possible relief from late filing penalties.
 

#4
Spock  
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I believe they always intended for this to be a partnership it is just the prior preparer filed as a Sched. C.

They questioned the prior preparer about it, but the prior preparer insisted it should be a Sched. C.
 


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