Interpreting Partnership Agreements and Reporting Terms on Form 1065

Description

A critical but often-overlooked component of preparing a partnership tax return is a review of the partnership operating agreement. The tendency is to review the partnership documents when setting up a 1065 client but not consult with them during the return preparation. However, continuing review of partnership operating documents is essential to both tax planning and compliance functions for partnership advisers.

There are several aspects of any partnership agreement that tax advisers must review as part of the compliance process. In addition to verifying that items of gain and loss are properly allocated, advisers should also be able to identify ambiguous or conflicting terms in the operating documents.

Advisers should also recognize issues in relating the return back to the operating documents in sufficient time to recommend retroactive changes allowed by Section 761(c).

Partnership operating agreements are not always clearly drafted, and compliance advisers will encounter situations even in boilerplate documents that are difficult to interpret and report on a Form 1065 and accompanying schedules.

Listen as our experienced panel provides a thorough and practical guide to interpreting and applying partnership agreement terms onto tax returns, identifying ambiguous terms, and recognizing planning opportunities.