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Partnership return

Forum|Forum|4 years ago
March 5, 2022
5 replies
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I just need a little support, I guess. I have a client filing their first Partnership return and the Gross Receipts are 270,000. After entering all the equipment for depreciation ( Work trucks lawn equipment etc) and all the expenses for doing business they have a loss of 101,000. Is that unusual for a first year company filing a partnership. I have checked and rechecked and this is what I come up with. Just wondering if anyone out there has encountered this before.

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Best answer by abctax55

Is the big loss being generated by bonus (or maybe §179) depreciation?

Free tip - If so, evaluate if taking so much depreciation is the best for the partners for THIS year, and future years.

abctax55Answer

Level 15

Is the big loss being generated by bonus (or maybe §179) depreciation?

Free tip - If so, evaluate if taking so much depreciation is the best for the partners for THIS year, and future years.

HumanKind... Be Both

K

kabbabkkgAuthor

Level 5

No 179 depreciation that is just with the regular depreciation

JRC

Level 7

I would weigh the value of QBI and Future Advantage of depreciation.

J

jeffmcpa2010

Level 10

Abctax has a great point.

You probably need a partners meeting to find out where they want to end up tax wise for the year, and discuss implications of writing everything off this year.

I would strongly encourage you to provide some good information, and explain the choices and consequences AND MAKE THE PARTNERS MAKE THE DECISION.

You make the decision, and 5 years from now someone will claim it was the wrong decision.

And Document, Document, Document the decision and the process.

qbteachmt

Level 15

Who owns the trucks and if there are loans, who is on the debt?

Don't yell at us; we're volunteers

K

kabbabkkgAuthor

Level 5

There are two pickup trucks a 2016 that was used then traded for a 2021 owned by one of the partners. The other truck such as dump trucks, lift trucks, mowers, mulches, utility trailers etc. some are financed

qbteachmt

Level 15

"There are two pickup trucks a 2016 that was used then traded for a 2021 owned by one of the partners."

Personally owned vehicles would not be paid for nor depreciated nor operated by the LLC as if the LLC owns them. The LLC needs to be the Owner. That is titled property.

If you and I form a partnership, and I contribute a truck to the partnership, I cannot also be the owner of that truck. If I want to use my personal vehicle for business, the LLC needs to have the provision that I can get reimbursed for the operating costs or there will be mileage allowance reporting.

Don't yell at us; we're volunteers

shf1957

Level 6

I know what caused this, I think. You might have checked the box re: the Economic Stimulus.. which is GOOD if they need to write it off in one year. I would suggest that you uncheck that box on some of the items and take them over the 3-5-7 yrs so they have those deductions since they probably will still have those expenses (payments). If they take the expenses all in this year, next year will be a killer. They would still have the payments but not the credits/depreciation deduction. In nice words, they will LOVE you this year but NEXT year they WON'T. LOL Hope this helps.

K

kabbabkkgAuthor

Level 5

Thank you I will check on that and to be honest I don’t know if there will be a next year the partners are not exactly seeing eye to eye. But that is another story. Thanks again

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