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Just a warning here on one facet that's somewhat grayed over in IRS docs and isn't always brought to light in tax software. To explain the solution to this warning is my understanding that a Partnership or LLC can keep their Partnership or LLC open, existing, etc until the very end of the final calendar (or Fiscal) year as long as the partners, members, and operating agreements agree tasks at hand. They could still need time to close out accounts, finish other tasks, decide new possible ventures etc. Whether the LLC sells stock or distributes assets doesn't necessarily mean the LLC must be closed early in the final year.
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But having said that just as a warning to anyone that isn't aware of the Final calendar year date facet, when dissolving a Partnership (or LLC). Specifically the final 1065 calendar ending date at the top of the form 1065. This is important because the IRS requires the partnership (or LLC) to file a final 1065 return earlier based on date of dissolution. I had this facet explained to me by a CPA, but I don't readily see it in all the IRS docs. Here's the thing.
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* Partners (or Members) need to think carefully about what date they really need to dissolve a Partnership or LLC in their final year. And if they don't have to dissolve sooner then they should put the Final calendar year ending date (at top of Form 1065) as Year ending Dec 30, of that final tax year. That way you can file the 1065 at the normal time in spring of the following year. When software, IRS Forms etc are available.
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This is also important because the IRS requires the partnership (or LLC) to file a final 1065 return based on date of dissolution. That means the partnership’s Tax Year ends on its date of termination, and it must file its final 1065 return by the 15th day of third month after that date. NOT the standard March 15 as a normal calendar yr 1065 due date.
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Say if they put on June 13, Tax Year ending date (at top of Form 1065 or any date prior to Dec 30, Tax Year) then the IRS requires the partnership's 1065 filed by the 15th day of third month after that date.
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And if they fail to file by the above said date then the fines are EXPENSIVE for each member accruing each month. Depending on the amount of time the 1065 is late and the number of members it can be a fine in the thousands over several months.
I looked online at,
https://www.irs.gov/businesses/small-businesses-self-employed/closing-a-business
I pasted this right off their page
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You must file Form 1065, U.S. Return of Partnership Income, for the year you close your business.
When you file, you must:
Report capital gains and losses on Schedule D (Form 1065).
Check the “final return” box (it’s near the top of the front page of the return, below the name and address).
Check the “final K-1” box on Schedule K-1 PDF.
You may also need to file these other forms with your Form 1065:
Form 4797, Sales of Business Property, for each year your partnership sells or exchanges property used in the business. You also need to file this form if closing your business causes business use of an eligible property under Section 179 to drop to 50% or less.
Form 8594, Asset Acquisition Statement, if you sell your business.
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That's it, just says for the year you close. That's easy to misunderstand if all you've ever done is file the 1065 by March 15 the following year.
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I really had to search over several IRS links before I found this.
https://www.irs.gov/instructions/i1065#en_US_2024_publink11392vd0e711
Termination of the Partnership
A partnership terminates when all its operations are discontinued and no part of any business, financial operation, or venture is continued by any of its partners in a partnership.
The partnership’s tax year ends on the date of termination which is the date the partnership winds up its affairs. Special rules apply in the case of a merger, consolidation, or division of a partnership. See Regulations sections 1.708-1(c) and (d) for details. Also see IRS.gov/newsroom/questions-and-ans[product key removed]ical-terminations-internal-revenue-code-irc-sec-708.
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I saw nothing about the expensive monthly fines of hundreds per month per member. NOR did it state the obvious solution of just keeping the LLC open until December 30. If for no other reason than just waiting till all the forms and software are available for the current tax year. Anyhow just seemed pretty incredulous to me.