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What is a Form 1065?

Form 1065 is used by business partnerships to report losses, gains and other financial information.
Each type of partnership has specific rules as to whether or not it should file form 1065.
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  • Last Modified Date: 11 December 2014
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Form 1065 is a document issued by the United States Internal Revenue Service (IRS) for specific tax purposes related to a business partnership. The full name of this form is the U.S. Return of Partnership Income. It is used to report information such as income, losses, gains, credits, or deductions, accumulated during the operation of a partnership for a tax year. It can be filed electronically; and, it must be filed on time – by 15 April, unless the 15th falls on a Saturday, a Sunday, or an extension is given.

Form 1065 is necessary because each partner contributes to the partnership and in return, shares any profits or losses that the business experiences. The partnership itself never pays taxes on the income it makes, but it passes those profits or losses through to its partners who pay taxes. The partners also receive deductions or credits as they are passed through from the partnership.

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There are several kinds of partnerships, and each one has specific rules as to whether it should file Form 1065. For example, it is unusual for a domestic partnership, a partnership based in the United States, not to file a 1065. This might happen if the partnership did not make any income nor have any expenses that could be deducted or credited. Other examples of partnerships include a foreign partnership: if it is connected with trade or business in the United States, it will also likely have to file Form 1065. Even if a business is an LLC, it must file a 1065. And, religious organizations that are exempt from paying income taxes must file, as well.

There are several additional schedules that may need to be filled out and filed with Form 1065. Most of them are located directly on the form itself. However, depending on they type of partnership, not all of the schedules need to be filed. Most of the schedules give additional financial information on the partnership and the contribution and shares of the income and losses for individual partners.

Any tax-related document can be confusing to figure out and file. There are detailed instructions on the IRS website. However, they can be a bit overwhelming and confusing as well. With the help of a good tax attorney or accountant, any specific questions can be answered clearly and accurately. In many cases, the attorney or accountant will simply ask for the paper work associated with the partnership and fill out Form 1065 on behalf of the partnership.

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whatismyname
Post 4

We've an LLC that sold about $8,000 of stuff. We are using all that money, about half in 2012 and the rest in 2013, for development of our product line. Does the LLC need to file a 1065 for 2012? We took zero distributions to any of the three partners. All the money is still in the LLC's account.

WalrusTusk
Post 3

@yoder07 - Typically, if the company didn't make a profit - at all - then you might not need to file taxes. Most states require that you only file if your profits have reached a certain threshold as both a business and an employee.

I'm assuming here that you are talking about filing as an employee and not a company, so keep that in mind. The best thing to do would be to contact a CPA or the IRS - if you can get a hold of a representative of the IRS, that is. Good luck!

yoder07
Post 1

If you formed an LLC and you worked for the LLC, but they did not make a profit, what do you substitute for W2 for the IRS?

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