I have a client who is the only General Partner of a Partnership and his partner is the Limited Partner, however, since they registered the company 3 years ago, each of the 2 members have been reporting the income on schedule C and NOT filing 1065. What do I do?
Looks like there are two different paths to choose from:
1. Amend the partners' 1040s for the 3 years as well as prepare 1065s for the years.
2. Start doing things right this year and tell them to both start going to church every Sunday and sit in the front pew and pray that their lottery number doesn't come up at the IRS.
As a side note to aid in path selection, did they have a partnership checkbook and act like a partnership or did they run things like 2 individual businesses?
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