K-1 with only expenses

Apr 18, 2023 Last reply: 3 years ago 4 Replies
S

I received an inquiry about an LLC taxed as a partnership, whose only members are non-citizens/nonresidents. The LLC has had expenses but no revenue.



Does the LLC need to send out K-1s to the members?



When a partnership has no revenue, it's not required to file a Form



1065. So K-1s wouldn't be required either. But if the partnership nevertheless files a 1065 to recognize expenses, are K-1s necessary?

I couldn't find an answer. But my thought would be that the K-1s wouldn't be necessary in the generic sense, but if they're not issued, the partners wouldn't be able to recognize those deductions in future years.



How am I doing? What do you think about how this should be treated?



Thanks.


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I

A partnership with expenses is required to file its return and issue K-1s. From the instructions:

Except as provided below, every domestic partnership must file Form 1065, unless it neither receives income nor incurs any expenditures treated as deductions or credits for federal income tax purposes.

Ira Smilovitz, EA Leonia, NJ

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S

Thanks. I'd forgotten that.

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S

So what happens if the LLC files the 1065 and issues K-1s, but the foreign partners don't file returns that show a loss? Do they lose the right to carry those deductions forward? I couldn't find a financial penalty for doing that.

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I

I don't know.

Ira Smilovitz, EA Leonia, NJ

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