Fillable Form 1065 or US Return of Partnership Income

What is Form 1065?

Form 1065, US Return of Partnership Income, is an Internal Revenue Service (IRS) form used to report the income of every domestic partnership in U.S. Partnerships file an information return to report their income, gains, losses, deductions, credits, et cetera. The IRS Form 1065, therefore, serves as the tax return form of partnerships.

A partnership is a form of business wherein two or more people take ownership of the business and share the responsibilities and benefits of the company with each other.

The 1065 IRS form gives the IRS an idea of the company's financial status for the year.

Who needs to use Form 1065?

All domestic partnerships must file the IRS Form 1065. This includes limited liability corporations (LLCs) classified as domestic partnerships and headquartered in the U.S.

How to fill out Form 1065?

Form 1065 IRS is a very long, but ultimately very simple form to fill out. Make sure to download the form in PDF format to preserve the contents however you choose to submit it. It will also be highly beneficial to have documents with the relevant information prepared so as to ensure that all information entered in the form is updated and correct.

Calendar or Tax Year

Enter the calendar or tax year beginning in 2021 that you are filing this form for.

Name of Partnership

Enter the name of the partnership.

Number, Street, and Room or Suite Number

Enter the number, street, and room or suite number of the partnership.

City or Town, State or Province, Country, and ZIP or Foreign Postal Code

Enter the city or town, state or province, country, and ZIP or Foreign Postal Code of the partnership.

Line A

Enter the principal business activity of the partnership.

Line B

Enter the partnership’s principal product or service.

Line C

Enter the partnership’s business code number.

Line D

Enter the partnership’s Employer Identification Number (EIN).

Line E

Enter the date that the partnership’s business started.

Line F

Enter the total assets of the partnership.

Line G

Check any of the following boxes that apply to the purpose for filing this form:

• Initial Return
• Final Return
• Name Change
• Address Change
• Amended Return

Line H

Check the appropriate box that indicates which accounting method will be used. You may choose from the following:

• Cash
• Accrual
• Other (Specify in the space provided)

Line I

Enter the number of Schedule K-1 forms attached to this form. Attach one for each person who was a partner at any time during the tax year.

Line J

Check the box provided if Schedules C and M-3 are attached to this form.

Line K

Check box (1) if the partnership aggregated activities for section 465 at-risk purposes, and box (2) if the partnership grouped activities for section 469 passive activity purposes.

Income

Line 1a

Enter the gross receipts or sales.

Line 1b

Enter the amount of returns and allowances.

Line 1c

Subtract Line 1b from Line 1a and enter the difference.

Line 2

Enter the cost of goods sold. Attach Form 1125-A to this form.

Line 3

Subtract Line 2 from Line 1c and enter the difference.

Line 4

Enter the amount of ordinary income or losses from other partnerships, estates, and trusts and attach the relevant statements to this form.

Line 5

Enter the net farm profit or loss and attach Schedule F (Form 1040) to this form.

Line 6

Enter the net gain or loss as indicated on Form 4797, Part II, Line 17, and attach Form 4797 to this form.

Line 7

Enter any other income or loss and attach the relevant statements to this form.

Line 8

Add Lines 3 through 7 and enter the sum.

Deductions

Line 9

Enter the salaries and wages paid (less any employment credits).

Line 10

Enter the amount of guaranteed payments to partners.

Line 11

Enter the cost of repairs and maintenance.

Line 12

Enter the costs incurred as a result of bad debts.

Line 13

Enter the cost of rent.

Line 14

Enter the total cost of taxes and licenses.

Line 15

Enter the amount of interest incurred.

Line 16a

Enter the amount of depreciation and attach Form 4562 if required.

Line 16b

Subtract the amount of depreciation reported on Form 1125-A and elsewhere on the return from the amount written on Line 16a, and enter the difference.

Line 17

Enter the cost of depletion. Do not deduct oil and gas depletion.

Line 18

Enter the cost of any retirement plans or similar.

Line 19

Enter the cost of any employee benefit programs.

Line 20

Enter any other deductions not declared above and attach the relevant statements to this form.

Line 21

Add the amounts shown on the far right columns of Lines 9 through 20 and enter the sum.

Line 22

Subtract Line 21 from Line 8 and enter the difference.

Tax and Payment

Line 23

Enter the amount of interest under the look-back method for completed long-term contracts, and attach Form 8697 to this form.

Line 24

Enter the amount of interest under the look-back method for the income forecast method and attach Form 8866 to this form.

Line 25

Enter the amount of BBA AAR imputed underpayment due.

Line 26

Enter any other taxes not declared above.

Line 27

Add Lines 23 through 26 and enter the sum.

Line 28

Enter the amount of payment to be made.

Line 29

If Line 28 is smaller than Line 27, enter the amount owed.

Line 30

If Line 28 is greater than Line 27, enter the amount of overpayment.

Signature

Have the partner or limited liability company member of the partnership that this form is being filed for sign in the space provided and enter the date the form was signed.

Title

Enter the title of the representative that signed this form.

Permission to Discuss Form with Preparer

Check “Yes” if you wish to allow the IRS to discuss this form with the preparer shown below. Otherwise, check “No”.

Paid Preparer Use Only

Preparer’s Name

Enter the name of the preparer.

Preparer Signature

Have the preparer sign the form in the space provided.

Date

Enter the date that the preparer signed the form.

Self-employed

Check the box provided if the preparer is self-employed.

Preparer Tax Identification Number

Enter the preparer’s Preparer Tax Identification Number (PTIN).

Firm Name

Enter the name of the firm that the preparer works for, if applicable.

Firm EIN

Enter the firm’s EIN, if applicable.

Firm Address

Enter the firm’s number, street, city or town, county or state, country, and ZIP code, if applicable.

Phone Number

Enter the preparer’s primary phone number.

Schedule B

Line 1

Check the appropriate box that indicates what type of entity is filing this form. You may choose one of the following:

• Domestic General Partnership
• Domestic Limited Partnership
• Domestic Limited Liability Company
• Domestic Limited Liability Partnership
• Foreign Partnership
• Other (specify in the space provided).

Line 2a

If any foreign or domestic corporation, partnership, trust, or tax-exempt organization own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital of the partnership, check “Yes” and attach Schedule B-1 to this form. Otherwise, check “No”.

Line 2b

If any individual or estate directly or indirectly owned an interest in 50% or more in the profit, loss, or capital of the partnership, check “Yes” and attach Schedule B-1 to this form. Otherwise, check “No”.

Line 3a

If the partnership directly or indirectly owned 50% or more of the total voting power of all classes of stock entitled to vote of any domestic or foreign corporation by the end of the tax year, check “Yes” and enter the following information in the columns below:

• Name of Corporation
• Employer Identification Number, if any.
• Country of Incorporation.
• Percentage Owned in Voting Stock.

Line 3b

If the partnership directly owned 20% or more, or directly or indirectly own an interest of 50% or more in the profit, loss, or capital of any foreign or domestic partnership or in the beneficial interest of a trust, check “Yes” and enter the following information in the columns below:

• Name of Entity
• Employer Identification Number, if any.
• Type of Entity
• Country of Organization
• Maximum Percentage Owned in Profit, Loss, or Capital

Line 4

Check “Yes” if the partnership satisfies all four of the following conditions:

• Total 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
• Schedules K-1 are filed with the return and furnished to the partners on or before the due date for the partnership return
• The partnership is not filing and is not required to file Schedule M-3

If all four of the above conditions are met, 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. Otherwise, check “No”

Line 5

If the partnership is a publicly traded partnership as defined in section 469(k)(2), check “Yes”. Otherwise, check “No”.

Line 6

If the partnership had any debt that was canceled, forgiven, or had the terms modified to reduce the principal amount of debt during the tax year, check “Yes”. Otherwise, check “No”.

Line 7

Check “Yes” if the partnership has or is required to file Form 8918. Otherwise, check “No”.

Line 8

If at any point during the calendar year of 2021, the partnership held an interest in or a signature or other authority over a financial account in a foreign country, check “Yes” and enter the name of the foreign country in the space provided. Otherwise, check “No”.

Line 9

If the partnership received a distribution from or was the grantor or transferor of a foreign trust, check “Yes”. The partnership may be required to file Form 3520. Otherwise, check “No”.

Line 10a

If the partnership is making or has previously made (and did not revoke) a section 754 election, check “Yes”. Otherwise, check “No”.

Line 10b

If the partnership made an optional basis adjustment under section 743(b) or 734(b) during this tax year, check “Yes'' and attach a statement showing the computation and allocation of said basis adjustment. Otherwise, check “No”.

Line 10c

If the partnership is required to adjust the basis of partnership assets under section 743(b) or 734(b) because of a substantial built-in loss or substantial basis reduction, check “Yes” and attach a statement showing the computation and allocation of the basis adjustment. Otherwise, check “No”.

Line 11

Check the box provided if the partnership distributed any property received in a like-kind exchange or contributed such property to another entity.

Line 12

Check “Yes” if the partnership distributed to any partner a tenancy-in-common or other undivided interest in partnership property at any time during the tax year. Otherwise, check “No”.

Line 13

If the box is required to file Form 8858, enter the number of Form 8858 copies attached to this form in the space provided.

Line 14

If the partnership has any foreign partners, check “Yes” and enter the number of Form 8805 copies filed for this partnership in the space provided.

Line 15

Enter the number of Form 8865 copies attached to this form in the space provided.

Line 16a

Check “Yes” if any payments were made in 2021 that would require Form 1099 to be filed. Otherwise, check “No”.

Line 16b

If “Yes” was checked in Line 16a, check “Yes” if you have or will file Form 1099. Otherwise, check “No”.

Line 17

Enter the number of Form 5471 copies attached to this form.

Line 18

Enter the number of partners that are foreign governments under section 892.

Line 19

If the partnership made any payments that would require it to file Forms 1042 and 1042-S under Chapter 3 or Chapter 4, check “Yes”. Otherwise, check “No”.

Line 20

If the partnership is a specific domestic entity that is required to file Form 8938 for this tax year, check “Yes”. Otherwise, check “No”.

Line 21

If the partnership is a section 721(c) partnership as defined in regulations section 1.721(c)-1(b)(14), check “Yes”. Otherwise, check “No”.

Line 22

If the partnership paid or accrued any interest or royalty for which one or more partners are not allowed to make a deduction under section 267A, check “Yes” and enter the total amount of disallowed deductions. Otherwise, check “No”.

Line 23

If the partnership had an election under section 163(j) for any real property trade or business or any farming business in effect during the tax year, check “Yes”. Otherwise, check “No”.

Line 24

Check “Yes” if the partnership satisfies one or more of the following conditions:

• The partnership owns a pass-through entity with current, or prior year carryover, excess business interest expense.
• The partnership’s aggregate average annual gross receipts for the 3 tax years preceding the current tax year are more than $26 million and the partnership has business interest.
• The partnership is a tax shelter and the partnership has business interest expense.

If any of the above conditions were met, complete and attach Form 8990 to this form. Otherwise, check “No”.

Line 25

If the partnership is attaching Form 8996 to certify as a qualified opportunity fund, check “Yes” and enter the amount from Form 8996, Line 15 in the space provided. Otherwise, check “No”.

Line 26

Enter the number of foreign partners subject to section 864(c) as a result of transferring all or a portion of an interest in the partnership or of receiving a distribution from the partnership. Make sure to complete Schedule K-3 for each foreign partner subject to section 864(c) on a transfer or distribution.

Line 27

If there were any transfers between the partnership and its partners subject to the disclosure requirements of Regulations section 1.707-8, check “Yes”. Otherwise, check “No”.

Line 28

If, since December 22, 2017, a foreign corporation directly or indirectly acquire substantially all of the properties constituting a trade or business of the partnership, and the ownership percentage for purposes of section 7874 was greater than 50%, check “Yes” and list the ownership percentage by vote and value. Otherwise, check “No”.

Line 29

If the partnership is electing out of the centralized partnership audit regime under section 6221(b), check “Yes” and enter the total written on Schedule B-2, Part III, Line 3 in the space provided. Otherwise, check “No” and complete the Designation of Partnership Representative as outlined below.

Designation of Partnership Representative (PR)

PR Name

Enter the name of the PR.

U.S. Address of the PR

Enter the following information on US address details of the PR:

• Number
• Street
• City or Town
• State or Province
• ZIP Code or Foreign Postal Code

U.S. Phone Number of the PR
Enter the PR’s phone number.

PR Representative Name (If PR is an entity)

If the PR is an entity, enter the name of the representative sent.

US Address of the Designated Individual

Enter the following information on the representative of the PR’s address:

• Number
• Street
• City or Town
• State or Province
• ZIP Code or Foreign Postal Code

US Phone Number of Designated Individual

Enter the representative’s phone number.

Schedule K - Partners’ Distributive Share Items

Income or Loss

Line 1

Enter the amount of ordinary business income or loss.

Line 2

Enter the amount of net rental real estate income or loss.

Line 3a

Enter the amount of gross rental income or loss.

Line 3b

Enter the total of any expenses from other rental activities and attach the relevant statement(s).

Line 3c

Subtract Line 3b from Line 3a, and enter the difference.

Line 4

Enter the following amounts of guaranteed payments:

• Line 4a: Services

• Line 4b: Capital

• Line 4c: Add Lines 4a and 4b and enter the sum.

Line 5

Enter the amount of interest income.

Line 6

Enter the amounts for each of the following dividends and dividend equivalents:

• Line 6a: Ordinary Dividends

• Line 6b: Qualified Dividends

• Line 6c: Dividend Equivalents

Line 7

Enter the amount of royalties earned.

Line 8

Enter the amount of net short-term capital gain or loss and attach Schedule D, Form 1065 to this form.

Line 9a

Enter the amount of net long-term capital gain or loss and attach Schedule D, Form 1065 to this form.

Line 9b

Enter the amount of collectibles (28%) gained or lost.

Line 9c

Enter the amount of unrecaptured section 1250 gain and attach the relevant statement.

Line 10

Enter the amount of net section 1231 gain or loss. Attach Form 4797 to this form.

Line 11

Enter any other income or loss not already declared above.

Deductions

Line 12

Enter the amount of deduction from section 179 and attach Form 4562 to this form.

Line 13a

Enter the amount of contributions made.

Line 13b

Enter the amount of expenses on investment interest.

Line 13c

Enter the following information on any section 59(e)(2) expenditures:

• (1) Type of expenditure
• (2) Amount of expenses

Line 13d

Enter any other deductions.

Self-Employment

Line 14a

Enter the amount of net earnings or losses from self-employment.

Line 14b

Enter the amount of gross farming or fishing income.

Line 14c

Enter the amount of gross nonfarm income.

Credits

Line 15a

Enter the amount of low-income housing credit.

Line 15b

Enter the amount of low-income housing credit.

Line 15c

Enter the amount of qualified rehabilitation expenditures from rental real estate, and attach Form 3468 to this form.

Line 15d

Enter the amount of any other rental real estate credits.

Line 15e

Enter the amount of any other rental credits.

Line 15f

Enter any other credits not already included above.

International Transactions

Line 16

Attach Schedule K-2 (Form 1065) to this form. Check the box provided to indicate that you are reporting items of international tax relevance.

Alternative Minimum Tax (AMT) Items

Line 17a

Enter the amount of post-1936 depreciation adjustment.

Line 17b

Enter the adjusted gain or loss.

Line 17c

Enter the amount of depletion other than from oil and glass.

Line 17d

Enter the amount of gross income earned from oil, gas, and geothermal properties.

Line 17e

Enter the amount of deductions on oil, gas, and geothermal properties.

Line 17f

Enter any other AMT items and attach the relevant statements to this form.

Other Information

Line 18a

Enter the amount of tax-exempt interest income.

Line 18b

Enter any other tax-exempt income.

Line 18c

Enter the amount of nondeductible expenses.

Line 19a

Enter the amount of distributions made of cash and marketable securities.

Line 19b

Enter the amount of distributions of other properties.

Line 20a

Enter the amount of investment income.

Line 20b

Enter the amount of investment expenses.

Line 20c

Enter any other relevant items and amounts and attach the relevant statements to this form.

Line 21

Enter the total amount of foreign taxes paid or accrued.

Analysis of Net Income or Loss

Line 1

Add Lines 1 through 11 of Schedule K and subtract from the result the sum of Lines 12 through 13d and 21, and enter the result.

Line 2

Enter the following analyses for each column for (a) General Partners and (b) Limited partners. The columns that must be filled out are as follows:

• (i) Corporate
• (ii) Individual (active)
• (iii) Individual (passive)
• (iv) Partnership
• (v) Exempt Organization
• (vi) Nominee/Other

Schedule L - Balance Sheets per Books

This section has four columns split into two groups: Columns (a) and (b) under “Beginning of Tax Year” and Columns (c) and (d) under “End of Tax Year”. Make sure to keep these in mind to avoid any confusion when entering information.

All information that is entered here should correspond to the information on the records of the partnership.

Line 1 - Cash

Enter the cash balances at the beginning and end of the tax year. For the rest of the items in this section, make sure to enter the appropriate balances of the given items at the beginning and end of the tax year.

Line 2a - Trade Notes and Accounts Receivable

Enter the balances of trade notes and accounts receivable.

Line 2b - Less Allowance for Bad Debts

Enter the balances of the amount of allowance reduced to account for bad debts.

Line 3 - Inventories

Enter the balances of inventories.

Line 4 - US Government Obligations

Enter the balances of any US Government Obligations.

Line 5 - Tax-exempt Securities

Enter the balances of tax-exempt securities.

Line 6 - Other Current Assets

Enter the balances of any other current assets and attach the relevant statements to this form.

Line 7a - Loans to Partners

Enter the balances of any loans given to partners or persons related to partners.

Line 7b - Mortgage and Real Estate Loans

Enter the balances of any mortgage and real estate loans.

Line 8 - Other Investments

Enter the balances of any other investments made and attach the relevant statements to this form.

Line 9a - Buildings and Other Depreciable Assets

Enter the balances of buildings and other depreciable assets.

Line 9b - Less Accumulated Depreciation

Enter the balances of the amount of depreciation accumulated.

Line 10a - Depletable Assets

Enter the balances of any depletable assets.

Line 10b - Less Accumulated Depletion

Enter the balances of the amount of depletion accumulated.

Line 11 - Land

Enter the balances of any land owned by the partnership, net of any amortization.

Line 12a - Intangible Assets

Enter the balances of any amortizable intangible assets owned.

Line 12b - Less Accumulated Amortization

Enter the balances of the amount of amortization accumulated.

Line 13 - Other Assets

Enter the balances of any other assets owned, and attach the relevant statements to this form.

Line 14 - Total Assets

Enter the balances of the total of all assets owned.

Liabilities and Capital

Line 15 - Accounts Payable

Enter the balances of accounts payable.

Line 16 - Mortgages, Notes, and Bonds Payable in Less Than 1 Year

Enter the balances of any mortgages, notes, and bonds payable in less than 1 year.

Line 17 - Other Current Liabilities

Enter the balances of any other current liabilities and attach the relevant statements to this form.

Line 18 - All Nonrecourse Loans

Enter the balances of all nonrecourse loans.

Line 19a - Loans from Partners

Enter the balances of loans from partners, or persons related to partners.

Line 19b - Mortgages, Notes, and Bonds Payable in 1 Year or More.

Enter the balances of any mortgages, notes, and bonds payable in 1 year or more.

Line 20 - Other Liabilities

Enter the balances of any other liabilities and attach the relevant statements to this form.

Line 21 - Partners’ Capital Accounts

Enter the balances of partners’ capital accounts.

Line 22 - Total Liabilities and Capital

Enter the total balances of liabilities and shareholders’ equity.

Schedule M-1 - Reconciliation of Income (Loss) per Books with Income (Loss) per Return

Line 1

Enter the amount of net income or loss.

Line 2

Enter the income included on Schedule K, Lines 1, 2, 3c, 5, 6a, 7, 8, 9a, 10, and 11 that has not been recorded in the books this year. Make sure to itemize them.

Line 3

Enter the amount of guaranteed payments, not including health insurance.

Line 4

Enter the amount of expenses recorded on the books this year that were not included on Schedule K, Lines 1 through 13d, and 21. Make sure to itemize them.

Line 4a

Enter the amount of depreciation.

Line 4b

Enter the amount spent on travel and entertainment.

Line 5

Add Lines 1 through 4 and enter the sum.

Line 6

Enter the amount of income not recorded on the books this year not included on Schedule K, Lines 1 through 11. Make sure to itemize them.

Line 6a

Enter the amount of tax-exempt interest.

Line 7

Enter the amount of deductions included on Schedule K, Lines 1 through 13d, and 21, not charged against book income this year. Make sure to itemize them.

Line 7a

Enter the amount of depreciation.

Line 8

Add Lines 6 and 7 and enter the sum.

Line 9

Subtract Line 8 from Line 5 and enter the difference.

Schedule M-2 - Analysis of Partners’ Capital Accounts

Line 1

Enter the balance of the account at the beginning of the year.

Line 2a

Enter the amount of capital contributed in cash.

Line 2b

Enter the amount of capital contributed through money.

Line 3

Enter the amount of net income or loss.

Line 4

Enter any other increases. Make sure to itemize each amount and use a separate sheet of paper as needed.

Line 5

Add Lines 1 through 4 and enter the sum.

Line 6a

Enter the amount of distributions made in cash.

Line 6b

Enter the amount of distributions made in property.

Line 7

Enter any other decreases. Make sure to itemize each amount and use a separate sheet of paper as needed.

Line 8

Add Lines 6 and 7 and enter the sum.

Line 9

Subtract Line 8 from Line 5 and enter the difference.

Tips when filling out Form 1065

Considering the length of the 1065 Form, it is very important to make sure that one is putting the correct and necessary information in each part to avoid any legal issues.

Keep the form in a safe and secure area. As Form 1065 will likely need to be submitted alongside several other attached forms, it is very important that it is kept in a safe area and submitted through secure and trustworthy means to avoid sensitive information being leaked and important documents being lost.

Double-check the information entered. Make sure that you have entered the correct information in the appropriate fields. It may be beneficial to consult the instructions of Form 1065 on the IRS website if you require more details on what must be entered in the form.

Practice Good Contract Management. Keep a copy of this form (filled out) in a safe place. This is to make sure that you have a copy of it ready when necessary, whether for legal purposes or simply to serve as a record or backup.