AvidReader
Level 1

But I believe there's a reason form 1065 includes check boxes for initial and final returns.  When the initial return box is checked, the computer system expects another partnership return for each subsequent tax year and K-1 issued for each partner until the final return box is check.  This allows for the EIN to be used as either a partnership or a disregarded entity.  The computer will automatically assess penalties which will have to be manually abated, if the agency feels so gracious that your explanation is satisfactory.  

You can be assigned an MBR EIN and use it on a Schedule C.  It will be treated as a disregarded entity so long as it was never included on a partnership return, or released from partnership status by checking the final return box.

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