Form 1065 (2015) Partnership Tax Checklist: Year- and Form-Specific Requirements
Year Audit: 2015-Specific Rules Applying to Form 1065
The 2015 Form 1065 is unique because it falls in the transition year before the filing deadline accelerates; the form itself implements Affordable Care Act information reporting requirements (sections 6055 and 6056 for forms 1094-C and 1095-C), and partnerships must report qualified joint venture elections or foreign partnership income restrictions tied to 2015-specific exemption thresholds.
The 2015 instructions explicitly apply the ACA employer health coverage offer rules (calendar years beginning after December 31, 2014) and reference Section 469 passive activity loss limitations and Section 751(a) exchange notifications within that tax year.
No EIP reconciliation, TCJA rules, or enhanced unemployment deductions apply to the 2015 Form 1065.
Form Audit: 1065-Specific Credits, Deductions, and Assembly Rules
Form 1065 is an information return; the partnership itself does not pay income tax. All income, gains, losses, deductions, and credits pass through to partners and are reported on Schedule K-1. Domestic partnerships must file unless they have no income and no deductible expenditures. Foreign partnerships with effectively connected income or U.S. source income of more than $20,000 during the tax year must file a return.
Nonresident partners have no special restrictions on 1065 itself, but certain credits and deductions are determined at the partner level based on Schedule K-1 reporting. Form 1065 requires attachment of Schedule K-1 for each partner, and small partnerships meeting specific conditions (total receipts under $250,000, total assets under $1 million, and not required to file Schedule M-3) may omit Schedules L, M-1, and M-2.
Ten-Step Checklist for 2015 Form 1065 Preparation
Step 1: Confirm Partnership Filing Requirement and Identify Tax Year
Verify that the partnership must file Form 1065 (the domestic partnership file) unless there is no income and no deductions. Confirm the tax year: calendar year 2015, or fiscal year beginning in 2015 and ending in 2016. Obtain the partnership EIN and verify that it was used on all prior-year returns and current-year federal documents.
Step 2: Gather Partnership Financial Records and Books of Account
Collect the trial balance report from the partnership books for the entire tax year. Obtain a balance sheet at the beginning of the year and end of the year (required for Schedule L if partnership receipts exceed $250,000 or total assets exceed $1 million). Compile P&L statement showing partnership income, deductions, and net profit or loss.
Step 3: Assemble Partner Information and Capital Account Documentation
For each partner who held any interest during 2015, obtain the full name, address, SSN or EIN, partner type (general partner, limited partner, or LLC member-manager), domestic or foreign status, percentage of profit/loss/capital at the beginning and end of year, beginning capital account balance, capital contributions during the year, withdrawals and distributions, and ending capital account balance.
Step 4: Collect Income and Expense Documentation
Gather all Forms 1099 issued to the partnership (1099-B, 1099-DIV, 1099-INT, 1099-MISC, 1099-K, 1099-NEC if applicable). Compile bank statements, credit card records, and itemized expenses. If the partnership conducted business in multiple states, compile state-by-state sales, payroll, and property reports.
Step 5: Document Asset, Depreciation, and Disposal Records
Collect depreciation schedules from prior years showing cost, date placed in service, prior depreciation, and business use percentage for all depreciable assets. Assemble the date of purchase, price, and business use percentage for all assets acquired during 2015. Document all asset disposals in 2015 with the date of sale, sales proceeds, accumulated depreciation, and gain or loss calculation.
Step 6: Verify Affordable Care Act Reporting Obligations
If the partnership is an applicable large employer (ALE), defined as one with 50 or more full-time and full-time equivalent employees, confirm whether Forms 1094-C and 1095-C were issued to covered employees for the 2015 calendar year. The deadline for employee furnishing is February 1, 2016. Partnerships are subject to information reporting rules under Sections 6055 and 6056, beginning with calendar years after December 31, 2014. Confirm the compliance documentation.
Step 7: Complete Partnership Information Page (Page 1, Lines 1–23)
Enter the partnership name, principal address, principal business activity code, EIN, tax year dates, accounting method (cash or accrual), and business code. Compute ordinary business income or loss on line 23 using income and deductions from lines 1 through 22. If the partnership qualifies for the small partnership exception (receipts under $250,000 AND assets under $1 million AND not required to file Schedule M-3 AND K-1s attached on time), note this for the Schedule L, M-1, and M-2 exemption.
Step 8: Complete Required Schedules Based on Partnership Size and Complexity
If partnership total receipts are $250,000 or more OR total assets are $1 million or more, complete Schedule L (balance sheet), Schedule M-1 (reconciliation of book and tax income), and Schedule M-2 (analysis of partners’ capital accounts). Answer all questions on Schedule B (Other Information), including whether the partnership is domestic or foreign, whether any partner owns 50% or more of profits/loss/capital, and whether the partnership qualifies for the Schedule M-3 requirement or made a section 754 election.
Step 9: Prepare Schedule K (Partners’ Distributive Share Items) and Individual K-1 for Each Partner
On Schedule K, enter total partnership income, gains, losses, deductions, and credits before allocation. For each partner, prepare Schedule K-1 showing that partner’s percentage share of each Schedule K item, guaranteed payments (if any), and capital account information (Item L).
Ensure each partner’s Schedule K-1 shows beginning and ending profit/loss/capital percentages, liabilities in three categories (nonrecourse, qualified nonrecourse, and recourse), whether the partner contributed property with built-in gain or loss, and allocations of ordinary business income (passive or nonpassive classification), net rental income, Section 179 deductions, capital gains and losses, self-employment income, and all other separately stated items with appropriate codes.
Step 10: Sign, Date, and Attach Required Documentation; Review for Accuracy
Form 1065 is not considered a return unless it is signed by a general partner or an LLC member-manager: sign and date Form 1065 and each Schedule K-1. If a paid preparer prepared the return, the preparer must sign in the designated area and provide their preparer tax identification number (PTIN). Ensure no penalty Schedule K-1 furnishing failures: each missing or incorrect Schedule K-1 carries a $260 penalty per instance (maximum $3,178,500 for all failures in a calendar year). Attach statements for any technical questions or special allocations. File a paper return to the IRS Service Center designated for the partnership’s state by the 15th day of the 4th month following tax year-end (for 2015: April 15, 2016).
2015 Form 1065 Line and Schedule Changes
Filing Deadline Transitional Language
The form header and instructions underwent clarification. Instructions referenced the 15th day of the 4th month after tax year-end for partnerships using the calendar year (April 15) in prior years. The 2015 instructions state, “For tax years beginning after 2015, 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.” For 2015, calendar-year partnerships still file by April 15, but the instructions alert preparers to the upcoming change, effective for 2016. This represents a clarified provision.
ACA Information Reporting Reminder on Cover
The “What’s New” section and Reminder box in instructions received an addition. Prior years’ forms did not mention this requirement. The 2015 version states: “Information reporting requirements for health insurance offers and coverage. Under the Affordable Care Act, employers that offer (or fail to offer) and others that provide minimum essential coverage to individuals are required under sections 6055 and 6056 to provide certain information to the IRS and to the individuals.
The information is required for calendar years beginning after December 31, 2014. For more information, see the 2015 Instructions for Forms 1094-C and 1095-C.” This represents an added provision.
Qualified Joint Venture Election Clarification
The “Who Must File” section and the Qualified Joint Venture exception underwent clarification. Prior years provided a general reference to the section 761 election. The 2015 instructions expand the explanation: if spouses materially participate as only members of a jointly owned business and file a joint return, they may elect not to be treated as a partnership and instead file separate Schedules C, C-EZ, or F.
Each spouse files a separate Schedule SE for self-employment tax. The election cannot be revoked without IRS consent. This election was available in prior years but is reemphasized in the 2015 instructions. This represents a clarified provision.
Penalty Changes for Schedule K-1 Reporting Failures
The Penalties section underwent an update. Prior years provided a general penalty reference. The 2015 version states, “For each failure to furnish Schedule K-1 to a partner when due and each failure to include on Schedule K-1 all the information required to be shown (or the inclusion of incorrect information), a $260 penalty may be imposed for each Schedule K-1 for which a failure occurs.
The maximum penalty is $3,178,500 for all such failures during a calendar year. If the requirement to report correct information is intentionally disregarded, each $260 penalty is increased to $520 or, if greater, 10% of the aggregate amount of items required to be reported.” This amendment represents an updated provision.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
