K1 for sibling checked Final, but Partnership and my K1 were not marked Final - What is IRS expecting this year?

[jimwest]

In 2021, we sold all of our rental properties. Sibling left the company, but my plan was to keep the company and buy a new property. No new property was found - so the business was dormant for all of 2022. 

In TT Business last year, we marked the sale of the properties. We also marked the sibling's K1 as Final. The Partnership and my K1 were not marked Final. For 2022, TT Business is saying I cannot file with them because there is only one person as a partnership. I can only file if I say I am a S or C Corp -- which they say is uncommon. 

Can I file in TT Premier noting my business there as a sole proprietor? The only item I need to file is estimated tax payments to the state we live in. Is the IRS still expecting a Partnership return and a K1 from me? Do I need to amend last year K1 or send a letter to the IRS?

[Anonymous_]

@Rick19744 can definitely be of assistance here.

Regardless, a partnership cannot exist with only one partner. As a result, the partnership needed to have filed a final return for the 2021 tax year when the sibling left the partnership.

[Rick19744 · Accepted solution]

I agree with @Anonymous_ 

Since it appears that you had a two partner partnership and one of the partners left, as a result, you no longer have a partnership.

Your K-1 along with the form 1065 should have been marked as final.

The partnership no longer exists.

You should probably check with your Secretary of State to see if you need to file anything as a result of this change.

Going forward, since there is no partnership, unless you establish another entity, you will file as a sole proprietor.  You should have a consult with an attorney to gain an understanding of legal liability issues and how to minimize your exposure.