Partnership separation

[Avs19]

Hi,

My client and her boyfriend formed a partnership LLC 7 years ago and ran a rental property through it. They got into an argument, and at the end of 2022, disolved the LLC and put the property under both of their names. 

I plan to do a final year 1065 and then split income and expenses on their 1040 moving forward. 

Does anyone see a problem with this?

Thanks!

[sjrcpa]

No.

[Terry53029]

Need to let the IRS know. Probably need to notify state also

Once the IRS has assigned an employer identification number to a partnership, it becomes the permanent federal taxpayer identification number for that business. To close their business account, partnerships need to send the IRS a letter that includes the complete legal name of their business, the EIN, the business address and the reason they wish to close their account. If they have a copy of the notice that the IRS issued with the EIN assignment, they should include that with the letter. They should write to the IRS at: Internal Revenue Service, Cincinnati, Ohio 45999.

[Skylane · Accepted solution]

I have no problem with your plan… @Terry53029 is probably correct but i just mark the 1065 as final. Ultimately, as far as the IRS is concerned, the tax has been paid in the past and will continue to be paid.. you can put a preparer note in if you’d like. 

The State is a separate issue. You have to close the entity with the state. Each state has its  own procedures. Start with their website.

[abctax55]

(Bruce, you're up late....)

[Avs19]

I believe they aleady dissolved with the State.

I'll mark final year on the 1065, zero out the balance sheet and move to their 1040's starting in 2023.

Thanks for the help!