This is a 2 partner P'Ship prospect. Partner 1 owns 100% of an outside Corp which elected the S-Corp tax entity at time of Incorporating. The Corp itself does NOT own any % in this P'Ship. Partner 2 owns a C-Corp and the C-Corp does not own any of the P'Ship but I don't believe this question pertains to this. On the 2012 P'Ship form 1065, the previous preparer checked YES on 3b then completed Part II of Sch B-1 where he entered Partner 1's individual, name and SS# and 100 in (iv) Column. Next line Partner 2's individual name, SS# and 50 entered in (iv) column. Partner 1's K-1 has 50/50 P/L and 100 Capital. Partner 2's K-1 has 50/50 P/L and Capital line is blank. Does this sound correct?
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The heading of Part 2 - ......50% or more of the profit, loss, or CAPITAL
If Partner 1 has 100% capital ownership, then his/her percentage should be 100% (note the "or")
If Partner 2 has 50% P/L share, then his/her percentage should be 50% for the PROFIT, LOSS share
That is the way I would handle the reporting. BTW - I am just referring to B-1 Reporting...Not commenting on whether partner 2 should have a capital account. -
I read the IRS instructions
It is probably not a big deal but its seems strange that the preparer didn't use Profit, Loss for both Partners on B-1 vs. Profit, Loss for Partner 2 and Capital for Partner 1. What I read, the IRS instruction do not request either Profit, Loss be used for all Partners or Capital be used for all Partners. Maybe some one this board read the IRS instructions differently.Originally posted by TXEA View PostComment
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