topic K-1 loss in Get your taxes done using TurboTax

K-1 loss

Broadwayricky — Wed, 03 Jun 2020 15:11:48 GMT

My K-1's are posting a $1 loss in box L line current year income (loss)? Why is this happening? We have never posted a loss before and we have not even begun operations, we are still in the fundraising phase of our business. How do I fix this to zero?

Re: K-1 loss

Anonymous_ — Wed, 03 Jun 2020 21:42:03 GMT

More details are needed since it is quite unclear as to how that result was obtained.

Regardless, Schedule L (EDIT: should be "Part II, Item L") is not required unless all four questions in Schedule B (Question 4) are answered in the affirmative.

See https://www.irs.gov/instructions/i1065#idm140672578331280

Further, if the partnership (or LLC) has not begun operations and, as a result, the partnership (or LLC) has incurred no income nor expenses, then filing Form 1065 is not required.

See https://www.irs.gov/instructions/i1065#idm140672607577504

The aforementioned begs the question as to why a 1065 is even being prepared if the organization is still in the start-up phase (i.e., has not started doing business).

Re: K-1 loss

Anonymous — Wed, 03 Jun 2020 20:06:07 GMT

I think the reference is not to schedule L but to box L on the K-1. this could be caused if the balance sheet is out of balance. but agreed they don't have to file.

Re: K-1 loss

Anonymous_ — Wed, 03 Jun 2020 21:40:45 GMT

@Anonymous wrote:

I think the reference is not to schedule L but to box L on the K-1. this could be caused if the balance sheet is out of balance.

Good point and that is what I meant to write rather than "Schedule L" (which I corrected in the post) and the balance sheet being out of balance is the most likely the cause.