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In the instructions for the preparation of 2018 returns for Partnerships and S Corporations, preparers are required to provide basis information for the owners with the return.  Failure to report will result in penalties.  The penalties for partnerships are calculated based upon the number of Schedule K-1s. 10 owners equals 10 times the penalty.  For S Corporations, the penalty applies at the owner level.

Partnership K-1 Reporting Requirements

  • Capital account information-beginning, activity, distributions and ending balances
  • Disclosure of method to calculate capital-tax, GAAP, Section 704(b) or other methods
  • NEW: Disclosure of actual tax basis if beginning or ending capital is negative

For timely filed 2018 returns, the penalties can be avoided if a separate filing is made by March 15, 2020 with the required information.  We hope you keep copies of your returns!

S Corporation Owners Reporting Requirements

  • Loss shown on Schedule K-1
  • Loss reported on Schedule E
  • NEW: Check box on Schedule E and
  • NEW: Attach basis computation to owner’s return

This attachment is required to be included on owner’s income tax return for 2018.