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Balance Sheet with form 1065

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    Balance Sheet with form 1065

    Can I file a partnership return without a balance sheet. The partners only report income and expense, inventory and fixed assets.

    It depends...

    From TTB page 20-23:

    Schedule L—Balance
    Sheets per Books
    Schedules L, M-1, and M-2 are not required
    to be completed if the partnership
    answered “Yes” to question 6, Schedule B
    (total receipts less than $250,000, assets
    less than $1,000,000, and Schedules K-1
    filed and furnished to partners).


      Yes, you can file partnership (and even corporate) returns without a balance sheet as long as the requirements referenced by Bees Knees are met. But I always include a balance sheet.

      Too many times, I've had new clients whose prior tax preparer omitted the balance sheet and related details from tax returns. What fun it is to re-create partner/shareholder basis without that detail.

      A properly completed balance sheet shows that you have properly accounted for all assets and liabilities, properly reconciled book and tax income, and properly accounted for members/partners capital (or retained earnings of a corp). Once you learn how to properly prepare Schedules L and M, they really don't take much time.

      Many preparers also omit partner/shareholder basis schedules. Yes, yes, I know it's the individual's resposibility to track their own basis, but in most cases the individuals are also clients. So why not take the time to do this when preparing the business returns.

      To omit balance sheets and basis schedules demonstrates either lack of knowledge or laziness. Clients deserve better from professional tax preparers.


        I prepare them, but I don't submit them to IRS when under the limits.
        I only send IRS what is required.
        "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith


          I am with John and with Michael. I only feel comfortable with the books of an entity if everything balances. This actually is the fun of it since it's close to accounting/bookkeeping that I love.

          I only recently learned, that we are required to have the basis calculation on file, if loss is claimed coming from a 1065. If 1120S and loss is claimed, we need to send the basis calculation with the 1040. I never knew that and thought this is something new. But then again, I don't even know if I ever claimed losses for a 1120S.