K2-k3

[Brian EA]

Taxpayer has a Partnership with his partner living in Canada. All income & expenses are from the US which makes it a domestic Partnership.
Does this Partnership need to file the K2 and K3 forms?
I tried to get rid of this client last year, but he keeps coming back.
I really don't want to do the return because the penalty for not filing those forms can be hefty.
Thanks for your advice.

Brian

[New York Enrolled Agent]

Have you read the Form 1065 instructions which list the 4 criteria to qualify for the domestic filing exception? If the partnership qualifies then you do not need to file the K2/K3 forms.

[Anarchrist]

Off the top of my head I don't know but my guess is yes.

How did you try to get rid of them? If you're spending more time than you're billing, point blank tell the client, "I've been spending way more time on your return every year than what I've billed. That is going to end, so the fee this year will increase by $X,000. Plus this year you're required to include forms K2 & K3 with your return. Those forms will cost an additional $X,XXX for a total increase of $X,XXX. If you want to continue, sign the client agreement and return it to me with a retainer of $X,XXX."

[Gretel]

Taxpayer has a Partnership with his partner living in Canada. All income & expenses are from the US which makes it a domestic Partnership.
Does this Partnership need to file the K2 and K3 forms?
I tried to get rid of this client last year, but he keeps coming back.
I really don't want to do the return because the penalty for not filing those forms can be hefty.
Thanks for your advice.

Brian

No answer to your K-2/K-3 question but I do encourage you to tell the client that you can't do his tax returns if this is what feels right to you.