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BACKGROUND:
Partnership continues as a sole proprietorship: New client brought in a K-1 marked as FINAL from this partnership; an LLC, treated as a partnership for years, has one real estate property (office building). Client is an original partner (1 of 5). He bought out all 4 other partners over the last 2 years. Final 1065 for 12/31/22 was prepared by another accountant--appears accurate. I am preparing his personal 1040 for 2022. I have entered the K-1 and marked it FINAL, and the box "Partnership Discontinued during 2022".
By doing so, an ERROR results on K1P Partnership Additional Info: ProSeries then wants me to mark a check box in Part II Disposition of Partnership Interest, Question 1. The choices are DISPOSED (sold, abandoned, liquidated or transferred his partnership interest), GIFTED his partnership interest or SOLD (on an installment basis). And, if I check any box in question 1 then I must complete questions 2, 3, 4 and enter figures in lines 5-12. At 12/31/2022 my Client owns 100% of the partnership, thus the LLC will be treated as a sole proprietorship on his 2023 tax return, Schedule C. The FEIN# and Company name are his alone for 2023.
QUESTION: if the business will continue with the same FEIN# and Name on the Clients own 2023 Schedule C, how do I answer K1P question 1 of Part II for his 2022 return? He didn't DISPOSE, GIFT or SELL his interest. He acquired ALL of the LLC interest. Do I just NOT check the "final K-1" so that no errors result? Or do I check the "final K-1" box and just enter all zeros in lines 5-12 of K1P screen?
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