Form 1065 Explained: A Complete Guide to Partnership Taxation

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Are you part of a General Partnership, Limited Partnership, or an LLC operating as a partnership?. This video provides a comprehensive breakdown of Form 1065, explaining exactly how to report income, deductions, and partner shares to the IRS.

In this video, we cover:

Who Must File: We discuss the filing requirements for partnerships, including foreign partnerships with U.S. source income.


Critical Deadlines: The filing deadline is March 15 for calendar year partnerships. We also explain how to use Form 7004 for a 6-month extension, though taxes must still be paid by the original deadline.


Income & Deductions: Learn how Page 1 functions like a profit and loss statement, covering Gross Receipts, Cost of Goods Sold (COGS), and deductions like salaries and rent.


Schedule K & K-1: Understand how ordinary business income, guaranteed payments, and portfolio income are summarized on Schedule K and passed to partners via Schedule K-1.


Schedule L (Balance Sheet): Find out if you are required to report assets and liabilities based on the $250,000 gross receipts or $1 million asset thresholds.


Reconciliation (M-1 & M-2): We explain how to reconcile book accounting vs. tax accounting (Schedule M-1) and how to track partner equity (Schedule M-2).

⚠️ Penalties & Mistakes: Avoid costly errors! The penalty for failure to file is $245 per partner, per month, for up to 12 months. We also discuss common mistakes, such as deducting losses exceeding your basis or failing to mark general partners as subject to self-employment tax.

📝 Client Checklist: To prepare your return, ensure you have the following ready:

Partnership EIN and Operating Agreement.

Financial Statements (Balance Sheet, P&L, and General Ledger).

Partner Information (SSNs/EINs and ownership percentages).

Payroll reports (Forms 941, 940) and asset purchase invoices.

Need a tax professional? Go to myonlinetaxguy.com