Not all partnerships are required to complete Schedules L, M-1, M-2, or Item F on Form 1065, page 1, or Item L on Schedule K-1. These are required only if Schedule B, question 4 is marked no.
Schedule B, question 4 on Form 1065 page 2, asks if the partnership satisfies all of the following conditions:
- The partnership's total receipts for the tax year were less than $250,000.
- The partnership's total assets at the end of the tax year were less than $1 million.
- Schedules K-1 are filed with the return and furnished to the partners on or before the due date (including extensions) for the partnership return.
- The partnership is not filing and is not required to file Schedule M-3.
Lacerte can check total receipts, total assets, and Schedule M-3. Lacerte cannot determine whether Schedules K-1 were timely furnished to partners.
Follow these steps to answer yes to Schedule B, question 4:
- Go to Screen 5, Other Information (Schedule B).
- Select the box "Question 4" requirements are met.
- If total receipts and total assets are both low enough, and Schedule M-3 is not generated, Lacerte automatically omits Schedules L, M-1, M-2 and K-1 (item L).
To force Schedule L, M-1, M-2, and K-1 (Item L) to calculate when question 4 requirements are met:
- Go to Screen 25, Balance Sheet Miscellaneous.
- Enter 1 in the box Schedules L, M-1, and M-2: 1=force, 2=when applicable [O].
- This will also print the Schedule K-1, Item L.
