2017 Form 1065, U.S.
Return of Partnership Income
Experienced Small
Business Accountant - IRS has
issued final versions of 2017 Form 1065, U.S. Return of Partnership Income, and
the instructions to that form. While the form itself is unchanged from the 2016
form, there are several changes to the instructions, including the following:
Page 1, Box A.
Principal business activity. The Principal Business Activity Codes, located at
the end of the Form 1065 instructions, have been updated and revised to reflect
updates to the North American Industry Classification System (NAICS).
Page 1, Signature. The
partnership return must be signed by a partner. Beginning in 2017, any partner
of a partnership or any member of a limited liability company may sign the
return.
Page 1, Line 16.
Depreciation. The Tax Cuts and Jobs Act (TCJA) provides that 100% bonus
depreciation applies to certain depreciable property acquired and placed in
service after Sept. 27, 2017. For such property, the TCJA also eliminates the
requirement that the original use of the property start with the taxpayer. The
TCJA also expands the definition of qualified property to include qualified
film, television, and live theatrical productions released, etc. after Sept.
27, 2017.
Address change for
filing returns. The filing address for partnerships located in some states has
changed. A complete list of filing addresses is on page 5 of the Form 1065
instructions.
New attachment to Form
1065. Certain U.S. persons that are the ultimate parent entity of a U.S.
multinational enterprise group with annual revenue for the preceding reporting
period of $850 million or more are required to file Form 8975. Form 8975 and
its Schedule A (Form 8975) must be filed with the income tax return of the
ultimate parent entity of a U.S. multinational enterprise group for the tax
year in or within which the reporting period covered by Form 8975 ends. These rules
apply beginning with the 12-month reporting period that begins on or after the
first day of a tax year of the ultimate parent entity that begins on or after
June 30, 2016.
Form 1065, Schedule
K-1. A new item was added to code G ("Contributions (100%)") of
Schedule K-1 (Form 1065), box 13, to report qualified cash contributions for
relief efforts in certain disaster areas. Partnerships should use this new item
to show each partner's distributive share of qualified cash contributions made
for relief efforts in certain disaster areas that were paid after Aug. 22,
2017, and before Jan. 1, 2018. Partners can elect to use a 100% AGI limitation
for these contributions.
Fiscal year
partnerships—TCJA rule changes. The TCJA contains numerous provisions that
change rules with respect to transactions that take place after Dec. 31, 2017
and thus may affect fiscal year 2017 returns.
Some of those
provisions are unique to partnerships. For example, for transfers of
partnership interests after Dec. 31, 2017, the definition of "substantial
built-in loss" in Code Sec. 743(d), under the rules that require the
adjustment of the basis of partnership property following the transfer of a
partnership interest, has been revised.
Other provisions apply
to businesses generally. For example, no deduction is allowed for certain
entertainment expenses, membership dues, and facilities used in connection with
these activities for amounts incurred or paid after Dec. 31, 2017.
Reminders about
significant changes made last year. These significant changes first affected
2016 returns and continue to apply to 2017 returns.
Due date for Form 1065.
The due date for a domestic partnership to file its Form 1065 has changed to
the 15th day of the 3rd month following the date its tax year ended.
Information reporting
by specified domestic entities. For tax years beginning after Dec. 31, 2015,
domestic partnerships that are formed or availed of to hold specified foreign
financial assets ("specified domestic entities") must file Form 8938
with their Form 1065 for the tax year. Form 8938 must be filed each year the
value of the partnership's specified foreign financial assets meets or exceeds
the reporting threshold.
A domestic partnership
required to file Form 8938 with its Form 1065 for the tax year should check
"Yes" to question 22 of Schedule B, Form 1065.
Pending bills that
could affect 2017 partnership tax returns. While the TCJA contained a few
extender provisions, many tax provisions expired at the end of 2016 and have
not as of yet been extended. On Dec. 20, 2017, Sen. Orrin Hatch (R-UT),
Chairman of the Senate Finance Committee, introduced the "Tax Extenders
Act of 2017", but no votes have taken place with respect to this bill.
And, in December 2017,
the House passed an additional disaster relief bill for Texas, Florida, Puerto
Rico and other regions stricken by recent natural catastrophes, that would
affect 2017 returns. The bill has not yet passed the Senate.
If you need help setting up or
completing any tax-related paperwork needed for your business, don't hesitate
to call. We're here to help!
For no obligation free consultation contact us today!
Amare
Berhie, Senior Accountant
(651)
300-4777
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