CFO refuses to provide a Schedule K-1 with Final K-1 checked and remaining capital loss

[hocoseba]

On July 7, 2020, I received via email a 2019 Schedule K-1 as a limited partner of an LLC from the CFO. It did not have Final K-1 checked. I anticipated another Schedule K-1 for 2020, but did not receive one. When I inquired with the CFO, he stated the LLC was shut down in 2019 and that he thought he had sent me a Schedule K-1 with Final K-1 checked, which I clarified he had not. He also stated that because he no longer worked for the LLC, he would not send an updated 2019 Schedule K-1 with 'Final K-1' checked. He is being obstinate and is conflating his feeling disgruntled about the failed business with legitimizing unethical and illegal behavior.  He has also not bothered to properly dissolve the LLC as it still shows as being registered on the Texas SoS website. Also, the 2019 Schedule K-1 he emailed me does not account for all of my capital account. Each of the years of the LLC's operations showed net losses. Hence, the final Schedule K-1 should show a net loss that accounts for my remaining capital account, but is short of that amount.

It's my understanding that I the 2019 Schedule K-1 with the corrected Final K-1 box checked must come from the LLC. How do I file amended 2019 Federal and State tax returns to reflect the dissolution of this LLC? How do I account for the net outstanding loss in my capital account? Thanks!

[Mike9241 · Accepted solution]

"Hence, the final Schedule K-1 should show a net loss that accounts for my remaining capital account, but is short of that amount." not necessarily so.  there are some possibilities.  however, you can file an amended 2019 return and decide how to handle the remaining capital a/c balance  - either as a capital loss or ordinary loss. 

Since you are guessing as to how to handle the remaining a/c balance and thus your return might be inaccurate use form 8082, Notice of Inconsistent Treatment to identify estimated K-1 items or when you disagree with the amounts reported on the K-1. yours is a BBA partnership

unless the CFO is lying about his status,  he no longer has the right to issue corrected tax forms.    since it usually costs $'s to formally close an LLC with the state, it's quite common for nothing to be done. when the annual fees aren't paid or the annual filing isn't done for several years in a row, the state will automatically dissolve the LLC. 

there is one other possibility about the balance in the capital a/c. and that is the amount is for non-deductible expenses that weren't properly reflected on the k-1's.  that would leave you with a zero basis and thus no additional ordinary loss and no capital loss. 

[hocoseba]

Thank you Mike9241!!! Form 8082 did the trick.