Thursday, September 11, 2008


Generally a partnership is a business organization with two or more members for carrying on a trade, business, financial operation, or venture and divides its profits. An incorporated organization is not partnership. An LLC having two or more owners is a partnership for federal tax purpose unless the LLC elects to be treated as a corporation and files Form 8832. The conversion of a partnership into an LLC classified as a partnership for federal tax purposes or conversion of an LLC classified as a partnership into a partnership does not terminate the partnership.

A partner can be an individual person, corporation, trust, estate, or another partnership. All general partners are personally liable for partnership liabilities. There can be no limited partners in a general partnership.

Partnership Tax Return (Form 1065)
A partnership must file an information return Form 1065 showing its income, deductions, and other required information. It must show the names and addresses of each partner and each partner's distributive share of taxable income. The return must be signed by a general partner. If a limited liability company is treated as a partnership, it must file Form 1065 and one of its members must sign the return.

A partnership is not considered to engage in a trade or business, and is not required to file a Form 1065, for any tax year in which it neither receives income nor pays or incurs any expenses treated as deductions or credits for federal income tax purposes.

A partnership files Income Tax Return Form 1065 and does not pay any taxes. The profit of a partnership is distributed among the partners. For this the partnership issues Form K-1 to the partners. Partners must include this profit in their own income income tax return and on this income pay 15.3% employment taxes. Form K-1 (Form 1065) income is reported on part II of schedule E (Form 1040).

Late Filing of Partnership Return
You the year 2007, the penalty is $85/month/partner, with a maximum of twelve months. The base penalty for 2008 is $86/month/partner with a maximum of twelve months.

Filing Extension Period
For the partnership returns (Form 1065 series) that have unextended due dates on or after January 1, 2009, the filing extension period is only five months (previously six months).

Partnership Termination
A partnership terminates when one of the following events take place
1. All its operations are discontinued and no part of any business, financial operation, or venture is continued by any of its partners in a partnership
2. At least 50% of the total interest in partnership capital and profits is sold or exchanged within a 12-month period, including sale or exchange to another partner (except in case an electing large partnership).
3. For special rules that apply to merger, consolidation, or division of partnership.

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1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
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1. Filing Requirement for a Dependent
2. 2009 Filing Requirements
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1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
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1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
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2. Foreclosure or Repossession of Main Home
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State Tax Return
1. Working in Two or More States
What's New for 2009
What's New for 2009

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