K-1 loss

[Broadwayricky]

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?

[tagteam · Accepted solution]

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).

[Anonymous]

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. 

[tagteam]

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@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. 

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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.