Does This Partnership Meet All Four Requirements?

In Keystone Tax Solutions Pro, you can access this question by selecting 'Schedule B' from the main menu of the 1065 return and changing the answer to 'YES' for the question 'Does This Partnership Meet All Four Requirements?' If your partnership satisfies these four requirements, it will not need to complete a Schedule M-1.

The four requirements are:

* The partnership is not filing or required to file Schedule M-3.

* Schedule K-1's are filed with the return and furnished to the partners on or before the due date (including extensions).

* The partnership's total assets were less than $1 million at the end of the tax year.

* The partnership's total receipts were less than $250,000 for the tax year.

When a partnership does not need to complete Schedule M-1, it must still complete Schedules L and M-2, which are used to reconcile the income reported on the tax return (Form 1065) with the income recorded in its accounting books. This is known as Schedule M-1, which is a reconciliation of income.

Schedule M-1 is required by the IRS for certain partnerships to report any differences between their accounting or book income and taxable income. These differences can arise due to differences in how businesses account for their operations.

If your partnership meets all four requirements, you will not need to file Schedule M-1 with your tax return. However, if you are unsure about whether your partnership needs to complete this schedule, it is recommended that you consult with a tax professional to determine the best course of action for your specific situation.

Example form 1065