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An 1120 will not work for a partnership because that is a C-Corp form, you must file a 1065.
You can still e-file the 1065 for tax year 2011, but not for prior years because the IRS does not accept prior years to be filed electronically filed.
Did your accounting firm try to file an 1120 for 2009 and 2010?
I think they tried and am not sure what happened. I have a copy of 1120 for 2010 which they sent me.
Is it better to be LLC to be taxed as S Corp or C-Corp for having less tax?
So I need to do paper filing for 2009 and 2010, right? if our accountant tried to file 1120, should I send the copy to them for 2010?
You need to get your 2009 and 2010 partnership tax returns filed as soon as you can. The K-1s were not issued to the partners timely so the IRS could impose a penalty of up to $195 per partner per month for a maximum of 12 months. If you are assessed the penalty, then I would request abatement because the accountant filed the wrong tax returns.
Then the partners will all have to filed amended returns for 2009 and 2010 because they will get K-1s from the partnership for these tax years.
C-Corps have a double tax issue that you must consider. They do pay their own income tax but the shareholders will have to pay tax on dividends that are received from the C-Corp as well as income tax on the W-2 wage earned from the C-Corp.
Our operation started on 5/4/2012, which means we did not have any income for 09 and 10. Wonder if we still have to file 1065.
S-Corps are a flow thru entity like a partnership, meaning the shareholders pay the income tax based on the percentage of the S-Corp they own, but also must receive a fair wage via a W-2. There are additional considerations for all three which you should consider fully and you should consult your accountant to determine which is best for your particular situation.
If your operations didn't start until 2012, then why did you ask about 2009 and 2010? Did you create the entity back then?
Yes, I created the entity in 2009, but started operation on 2011.
our Accounting Firm were working to determine classification of our entity and tried to file 1120, but when I called to IRS, they said I have to file 1065 for 9,10,11 and they did not get any tax return for last 2 years.
Thank you for taking time with me...if we are partnership, owners will get K-1s instead of company paying income tax, am I right?
We had some invested money in the company account to do research and hired only one person to do all that. So we had some expenses on payroll and research for 09 and 10. Is there any other form to file if we did not have income?
Yes, the partners will get K-1s based upon their ownership percentage. The net profit/loss will flow thru to their personal tax returns and they will pay income tax and self-employment tax on their percentage of the net profit of the partnership, regardless of what they have taken out of the partnership as a distribution. The partners can be paid guaranteed payments for their services to the partnership. These will be subject to self-employment tax and income tax as well to said partner, but will be a deduction to the partnership.
So even tho we did not have any operation going on, we need file 1065, right?
It sounds as though you may have start up costs if the research was not for a new product or patent or anything such as that, was it?
no, it was for just location and we had trademark on logo.
location research, I mean
I am still looking. I thought I had seen something that if the partnership has no activities, a return is not required...but I want to find that.
ok, thank you
For startup costs, you are to start amortizing them in the year your business begins. Techically, you said operations did not begin until 2012.
Then the startup costs should be amortized starting on your 2011 return when your business started.
we have income for last year.
So we do not have to file for 09 and 10?
That is fine, you are required to file a return for 2011 because you were in business and had income and expenses.
Now, for 2009 and 2010 I have found on page 2 of the 1065 instructions under "Who Must File" it says you must file unless you receive no income and incur no expenditures that would be treated as a deduction or credit for federal income tax purposes. Here is the link to those instructions. http://www.irs.gov/pub/irs-pdf/i1065.pdf
oh ok, so still we need to file them/ but wonder about fine?
Since you startup costs are not deductible until your business started in 2011, you should not have had any deductible expenses or credits or income on your 2009 and 2010 returns so no partnership returns are required.
oh, I got it wrong.
So now, I can file 1065 for partnership, with all expenses we had for Y09 and Y10, right?
Yes, but they will be treated as startup costs. So there will be limitations as to what can be deducted in 2011 and what has to be amortized over 15 years.
If there IRS sends you any notices about not filing your 1065 for 2009 and 2010, respond with the information found in the instructions of the 1065 that I showed you.
No I haven't got any notice, just found out by calling
ok, thank you so much
oh, what website usually companies use to file electronically?
There is no specific website that companies use to efile. Many income tax software providers offer efile services, as should your accountant.
Do you have any other questions?
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