Under the tax-basis method, partnerships report partner contributions, the partner’s share of partnership net income or loss, withdrawals and distributions, and other increases or decreases using tax-basis principles as opposed to reporting using other methods such as GAAP.Īccording to IRS data, most partnerships already use the tax-basis method even though multiple methods were permitted. Partnerships filing Form 1065 for tax year 2020 must calculate partner capital accounts using the transactional approach for the tax-basis method. The revised instructions will apply to the 2020 tax year (i.e., the 2021 filing season) and include revised instructions for partnerships required to report capital accounts to partners on Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc. The IRS is accepting comments on the draft instructions for 30 days and plans to issue final instructions in December. Return of Partnership Income ( IR-2020-240). On Thursday, the IRS released an early draft of the instructions for Form 1065, U.S.
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