Infrequently used sections of the tax forms - Schedule L , M-1, M-2 , Section L of the K-1

While most sections of the 1065 and K-1 forms are reasonably obvious about whether they need to be filled in or not, there are a few sections that might *appear* to be necessary, but actually are not.

 

The most common ones we see questions on are:

 

Lines 1 through 22 on the first page of the 1065. These are only required for partnerships that run a business, own property, or have employees. This doesn’t apply to investment clubs.

 

Schedule L, M-1, and M-2:

These are only required if any of the following are true:

a) The partnership's total receipts for the tax year were more than $250,000.

b) The partnership’s total assets at the end of the tax year were more than $1 million.

 

This is directly connected to one of the questions in the tax printer, so if you answer the question ‘No’ in myICLUB, or leave the box blank when using the desktop tax printer, then those sections will be filled in. The club won’t get in trouble for having these sections filled in un-necessarily, it just makes a bit of extra work for the IRS when checking over the form.

 

Part II, Section L of the K-1 form:

Similar to Schedule L, M-1, and M-2, this section is only required if receipts and assets are above the listed amount(s) when completing the tax printer. Also similarly, nobody will get in trouble if the section is filled in un-necessarily, it just makes a bit of extra work for the IRS when checking over the form.