Hey all,
Had a meeting with a potential new client, husband & wife. They have been self preparing their tax returns, nothing has every been prepared by an outside party. They are now realizing there are several issues, so came in for help.
Husband & wife have three businesses, all LLC's, and as I found out, all were setup as partnerships with the IRS (I requested the SS-4 to confirm) . They are both the partners of each entity, there are no outside partners. Two were setup in 2018, and another was setup in 2019 (no extensions were filed for 2019 for any of the businesses). The problem is that each business has been filed on schedule C of their personal return. No partnership returns have been filed since formation.
I'm unsure if there is anyway to proceed in correcting every return without them incurring significant non-filing penalties for each of the partnership return. I figure right now they are looking at approx $5,000 per return for each year/return, for 2018 and 2019. S
I'm wondering that because they did report the income, via Sch C, and assuming when I prepare the partnership returns the income is the same (hahaha), that I could use Rev Proc 84-35 to request abatement of penalties since they did pickup the income on the personal return. I'm also unsure if there is an alternative to filing the partnership return since none were every filed.
Any help, guidance, alternatives, additional questions, are all appreciated.