When both the gross receipts and total assets are less than the applicable threshold the Schedules L, M-1, and M-2 may not be required and can be suspended. See the thresholds and how to suspend the calculation for your return type:
For Partnership (Form 1065) returns:
Partnerships are not required to complete Schedules L, M1, and M2 when:
- Gross receipts for the tax year were less than $250,000.
- Total assets at the end of the tax year were less than $1,000,000.
To suspend the Schedule L, M1, and M2 calculations in the 1065 return:
- Open the 1065 Federal return.
- Go to Form 1065 Pages 1-3.
- Scroll down to the Schedule B on Page 2.
- Go to Line 6d and check Yes next to the line labeled: If Yes the partnership is not required to complete Schedules L, M-1, and M-2: Item F on page 1 of Form 1065: or item L on Schedule K-1.
- Check No to the question listed on the Completion of Schedules L, M-1, M-2, etc Smart Worksheet.
For S-Corporate (Form 1120S) returns:
S Corporations are not required to complete Schedules L, M1, and M2 when:
- Gross receipts for the tax year were less than $250,000.
- Total assets at the end of the tax year were less than $250,000.
To suspend the Schedule L, M1, and M2 calculations in the 1120S return:
- Open the 1120S Federal return.
- Go to the 1120S Pages 1-2.
- Scroll down to the Schedule B on Page 2.
- After line 10b check the box that states: Check this box to suspend the Schedule L, and M-1 calculations.
For Corporate (Form 1120) returns:
Corporations are not required to complete Schedules L, M1, and M2 when:
- Gross receipts for the tax year were less than $250,000.
- Total assets at the end of the tax year were less than $250,000.
To suspend the Schedule L, M1, and M2 calculations in the 1120 return:
- Open the 1120 Federal return.
- Go to Form 1120 Pages 3-5.
- Scroll down to the Schedule K, Page 4.
- After Line 13, check the box labeled: Check here to suspend the Schedule L, M-1, and M-2 calculations.
