Question
You are an associate in an accounting firm that principally prepares individual tax returns. Knowing that you have taken a course on partnerships, Tami- Lynn
You are an associate in an accounting firm that principally prepares individual tax returns. Knowing that you have taken a course on partnerships, Tami- Lynn (the tax partner on the account) asked you to help prepare the tax return for a new client (Ted Clubberlang) that she took on as a favor for a friend. Ted has not yet filed his 2021 tax return and really needs your help as he is worried about being delinquent with his IRS filing obligations. You briefly talked to Ted on the phone, and he told you that in addition to his W-2 wages from his employment at a local grocery store, he also received the attached Schedule K-1 from a partnership that he entered into years ago with Donna Martin.
You ask Ted if there is a partnership agreement or any other documentation for the partnership and Ted told you that there is no partnership agreement as it was a handshake agreement and he simply invested $20,000 in cash in the partnership years ago. Ted is anxious that you prepare his return promptly as it is delinquent and because this Schedule K-1 reflects a flow-through loss and he already has plans for spending his tax refund.
Draft a quick email to Tami-Lynn summarizing the tax issues and your concerns (if any) with the
Schedule K-1 that Ted provided to you.
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