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Form 1065 K-1 filed without beg/end capital and liabilities share; if no income/loss impact, should I amend?

Short question:

Are following a reason to AMEND the Form 1065 and send out new K-1's:  

 (a) missing balance sheet data (beg/end capital and liabilities) but no income/loss impact, or

 (b) using wrong state of residence address for the guaranteed payment partner (me).

Details:

I manage a California LLC filing as Partnership on Form 1065.  I filed on the deadline March 15 and sent out K-1s to three passive partners plus me, active partner/manager. 

For the 2022 partnership return, I did not complete the balance sheet (not required as we are small).  HOWEVER, the partners' tax accountant wants beginning and ending capital and share of non-recourse liabilities to print on the K-1's.  Secondly, my K-1 shows the wrong state of residence for me, just dumb mistake as of course I don't have to mail the thing to myself.  I have no capital in the business, receiving only small "Guaranteed Payments."

What I did:

I have gone back--miserable task--and completed the balance sheet (for two years, as I didn't prepare it in 2021 either, but nobody noticed). 

Question:

Should I amend Form 1065 and the K-1's for 2022?  (And 2021 for that matter?  Yikes) 

I have not filed my own 2022 personal income tax (Form 1040 and CA Form540NR) yet, and want to get this right.  The balance sheet info affects three partners, not me; the address mistake just affects one partner, me. 

Technical process question, IF I amend:

When I added the balance sheet details in the 2021 file, the K-1's populated nicely with the ending capital and non-recourse liabilities info.  But for 2022, it looks like I need to manually enter that information.  Correct?

THANK YOU for any advice!!

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1 Best answer

Accepted Solutions
RobertB4444
Expert Alumni

Form 1065 K-1 filed without beg/end capital and liabilities share; if no income/loss impact, should I amend?

You do not need to amend the return with the IRS in order to provide them with information that they do not need and did not request.  As long as your address is correct on your personal return you should be ok and as long as the main partnership address is ok everything else will be fine.

 

You can go through all of the steps to amend in order to satisfy the partners requests and then just not send it.  This will make sure that the data that you roll over into next year is complete as well.

 

@WineBusinessManager 

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3 Replies
RobertB4444
Expert Alumni

Form 1065 K-1 filed without beg/end capital and liabilities share; if no income/loss impact, should I amend?

You do not need to amend the return with the IRS in order to provide them with information that they do not need and did not request.  As long as your address is correct on your personal return you should be ok and as long as the main partnership address is ok everything else will be fine.

 

You can go through all of the steps to amend in order to satisfy the partners requests and then just not send it.  This will make sure that the data that you roll over into next year is complete as well.

 

@WineBusinessManager 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Form 1065 K-1 filed without beg/end capital and liabilities share; if no income/loss impact, should I amend?

Very much appreciated @RobertB4444

 

I did exactly as you suggested-- created a second file with the "amendments" including correction of my address; just finishing it now.

 

So should I actually FILE IT?

 

The only issue really is whether it hurts ME prospectively to have an old address on this K-1 two years running.  I converted my former home in California to business use mid-2021 and planning a 1031 Exchange later this year or early next year.  At time of sale, I should have 24 months primary residence (part of 2019, 2020, part of 2021) and 24 months business use (part of 2021, 2022, part of 2023).  Therefore qualifying for both a primary residence exclusion of 250k gain, and the like-kind exchange exclusion/deferral of the balance of "capital gain."  Tight squeeze into the preceding five years but it's there.  That said, my move was messy, has taken a long time to execute; I don't want a trail of "evidence" that suggests I didn't really move, like filing a K-1 showing my residence address/state as the now business address in CA, when my primary residence is in TN.  I was lazy (i.e., extremely busy) and just forwarded mail for a year, didn't get the new drivers' license right away etc ...  This will be the subject of another post I'm sure on 1031 exchange execution.  As "date moved" or "date residency established" seems a lot more fluid when you do it in real life, than IRS forms would make it seem!! 

 

THE QUESTION:  If it doesn't cost (but an e-file fee?) to file 1065X, and I've already gone through all the steps, then is there any harm to send it in to the IRS?  Or am I overthinking?

AliciaP1
Expert Alumni

Form 1065 K-1 filed without beg/end capital and liabilities share; if no income/loss impact, should I amend?

There's no harm either way.  Many people receive forms that have been forwarded in the mail.  As long as you have reported your returns with the correct actual residency, the address on the K-1 does not matter.  This is not a line item the IRS or state checks to see if it's in agreement with your annual return.

 

@WineBusinessManager 

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