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So I feel I am getting dumber and dumber...Basis 1065 - quick please , thank you!


WITAXLADY
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New client - no basis on any paperwork from 4 years back..

How do I come up with it?

I do have Recourse numbers and Asset list...

And they have $73,000 in the account **

No Sch M's, L as receipts under $250,000

I bldg rental and 1 farmland on same tax bill.

Just ask the partners?

I did ask former preparer but I imagine this time of year - not responding.. I would..

* - Can they not split that?

1 partner's distribution was higher than allowed for the year - part of that - would it not be just from prior?

 

Thank you,

Darlene

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A year or so ago, I had to recreate basis for a couple partnerships that weren't always my clients. Luckily, they had all the partnership returns.

Money in

+ income

- losses

-distributions

etc.

https://www.irs.gov/pub/irs-pdf/i1065sk1.pdf

https://www.irs.gov/pub/irs-utl/partners-outside-basis.pdf

If you use CCH's AnswerConnect: https://answerconnect.cch.com/intradoctoc-document/tpz0209013e2c84a68b88

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Assume you have absolutely nothing except current year statistics.  If you don't have current year, you should not be doing the return.

Reconstruct beginning balances by asking about real estate and equipment, and dates of purchase, then reconstruct accumulated depreciation.  Current year cash can be rolled back to a Jan 1 balance.  From amounts on loan service, you can deduct the amount interest, then reconstruct beginning balances on loans.

Current year information is necessary anyway.  Make sure you charge enough and tell them up front it will cost.

For what it's worth, I do schedule L, M-1, and M-2 for every Partnership and Corporation regardless of size.  Anything less means I am not setting forth proper due diligence.

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I am not going to get into the messy details, but for years I did a 1065 return with no basis details.

It was hard enough just to get the Income & Expenses!

Finally earlier this year, I told them that I couldn't do their return any more.

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I had a client finally decide to go elsewhere a couple of years ago with their partnership return because the family member managing the books got tired of my asking for so much detail and clarifications about iffy numbers.  I am much happier now. It was the last of my business returns (outside of Sch. C's) and life is better.  It's just too short, in my opinion, to try to deal with missing/incomplete/questionable data and still feel confident about signing a return. 

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Good decision, cbslee, because starting in 2020 IRS requires tax basis reporting.  If you can't prove it, basis is zero.  I had a partner once who always took out more than his share of income, got his basis down to zero, and had to pay tax on excess distributions every year.  He thought he was getting away with something by submitting receipts for golf club memberships, family cell and internet plans, etc, to the partnership, which reimbursed him.  Other partners were not happy to realize he was taking out more than his share.  Could that be the case with your client Darlene?

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Dear all,

Thank you!

Sara, no I do not think so - with so much in savings - I do not think they ever took money out..

So is all that savings now part of basis?

I talked to the former preparer and they said they came to her with no information

yay! shopping !

Margaret - I am going the opposite way - We are buried as we have about 60 entities now - mostly closely held..

Most are good especially if we started them but not the ones that come in word of mouth!

And I am confused about the "distributions" maybe it is just money they should have taken out from last years or prior years taxed earnings..??

D

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I regret taking on new clients this season; have way too many to finish by 15 October. (Only one more partnership by 15 September, though.) I may send a couple of them elsewhere or offer them November preparation, maybe with a discount if they look like keepers after I dig into them. And, a couple of them have had two different preparers in the last two years and SE side gigs; those may get kicked to the curb if I find any funny stuff as I get into their details. As you say, shoppers!

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