Partnership k1 received by my client as a 50% general partner in building contractor business. Per K1- beginning capital 0, current income is only increase of 15k, withdrawels 17k, ending capita (2)k(rounded amounts for simplicity). Partner's share of liability section is blank. I know that the partnership carries construction loan debt and that my client is a guarantor and therefore has basis to cover the negative cap account...i just don't know the amount of loans. Would you contact the preparer of the partnership return and ask for a balance sheet? Should i extend my client's return until I can calculate his outside basis? This is my second year doing his return...I never saw the k1 last year, client telephoned the info to me at the last moment.
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John -
The preparer obviously failed to complete the section dealing with liabilities. I would ask for a corrected K-1. -
If line 5 of Schedule B, Form 1065 is checked yes, the partnership is not required to complete the partnership balance sheet. The K-1 would thus simply be a net profit report with no information on partner capital or other balance sheet items. So it is not necessarily an incomplete K-1. Each partner is responsible for calculating basis. The preparer of the 1065 may not even have access to that information.Comment
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