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"Or should they just know what to have filed based on the 2020 K-1 that was issued to them"
Okay, no surprise; I am a bit lost as to which "they" this is. The old partners or the new partners got this 2020 K-1? Or, all of them? “Anyway, in 2020, it was just one of these 2 partners as 99% owner and the two partners that were bought out as .05% owners.”
As of When? They don’t get to skip on having a Date of ownership change. What about the Secretary of State? E&O Insurance changeover? AIA?
So, it was a three-person partnership and now it is two, and your client bought out the minor 2 people at .5% each = 1%? Or, there were two terminating partners, their 1% rolled back to what would now be the Sole Proprietor, and he decided to let your client "buy in?" See how that is different?
"as they were gone by the end of 2020"
Then they have nothing to do with 2021.
"They said they paid for the client base/ goodwill only, no physical assets"
?
“$60,960” That’s a LOT for a customer list and no assets. And they didn’t need to buy the list of that LLC, because you told us: “they had bought LLC” with one existing partner still a partner and the entity still is the entity. It already owns that list. Or, another perspective: your taxpayer client paying nearly $70,000 for a 1% stake in the partnership means the partnership valuation is $6 million?
An architectural firm is going to have lots of equipment, computers, plotters, and AutoCAD is an asset. Office equipment, web presence, space lease, ongoing contracts with clients? Calling those projects "client base" is fine, but what about prepayment deposits, and unpaid invoices? And you should have some sort of partnership document that shows the change of partners, the percentages, and the ownership purchase date for your client.
Is this what happened: the business was dead. The 2 old partners wanted to walk away. One or both wanted to be paid as if they had Salary yet to collect?
LLC is the Entity. Architecture is the Business. These are not synonyms. The one is the Operations (architectural firm) and there is an Entity that is the legal construct (LLC, or everyone else is an employee and works for the one Sole Proprietor; or, an S Corp).
Tell them you can't make a tax return out of thin air. Someone is doing a 1065, and you get that person's K-1 to use for their 1040. If you have to put up a firewall, that is where you draw the line, I guess. If you are doing the 1065, it appears you have a problem. You might need to rope in a local to help mentor you all through this process; perhaps a tax attorney, because there seem to be some overlooked legal issues.
Yes, there could be a 1099-Int required. Hard to tell. I'm doing my best to give some perspective, not by going from what people are stating, but translating into, "Is this what that means?"
This is not an issue of how to use ProSeries.
Don't yell at us; we're volunteers