Form 1065 - Does a partnership have to file an entire amended return to only change 4 K-1s? Thanks!

[wrightlj]

The partnership (27 partners) was only informed last month of the death of one partner back in 2013.   No mail was ever returned over the years, so there was no reason for the partnership to believe anything had changed.  

There are 3 heirs who now need K-1s for 2013-2017.   I understand that the 2013 return needs to be amended to show this transfer of ownership, but are we required to file a complete amended return for each of the subsequent years, with all 27 (now 29) K-1s included, if the only change is on these few K-1s?  Is there a more efficient way to do this?

Also, is it appropriate for the partnership to recoup the expense of this extra work out of future distributions to these "new" partners?  

[sjrcpa · Accepted solution]

Filing an entire amended return with all K-1s is the way to do this. Howvere, none of the other K-1s will have changed so those partners will not need to get "amended" K-1s.

[PhoebeRoberts]

I'm going to be a contrarian. The estate of the decedent may well have been the partner until the partnership admitted the heirs. The heirs need to file 1041s and get their K-1s that way.

I'd certainly be comfortable taking the position that unless the heirs pay for a legal opinion that the K-1s should be amended, those years stand as filed.

[sjrcpa]

That's a much better answer than mine. Less work, too.

[wrightlj]

Wow!  A lot less work for sure.  So, basically, the partnership can choose to admit these heirs as of January 1, 2018, since we haven't filed yet, the heirs will get the 2018 K-1s and that's the end of it as far as the partnership is concerned.  Is that correct?  

[PhoebeRoberts]

You need to read the partnership operating agreement to be sure what options the partnership has. That's what you want the heirs to pay the attorney to do - to opine on what the operating agreement requires.

[wrightlj]

After conversation with the attorneys for the estate (which was already closed), we are transferring ownership to the heirs as of 1/1/18.  The heirs will sign a document holding the partnership harmless for any possible issues.  The attorneys had informed the heirs back in 2013 about their mother's interest in our partnership, and they failed to get in touch with us.  I think we're good, and I appreciate all the responses!