IRS Form 1065 is a tax return form used by partnerships in the United States to report their income, gains, losses, deductions, and credits to the Internal Revenue Service (IRS). It is also known as the “U.S. Return of Partnership Income” form.

Form 1065 is used to report a partnership’s financial activity, including the partnership’s revenue and expenses, as well as the allocation of profits and losses among the partners. The form is typically due by the 15th day of the third month following the end of the partnership’s fiscal year, which is usually March 15th for calendar year partnerships.

Partners must first provide their name, address, and Employer Identification Number (EIN) on the form. They must also provide the names and addresses of the partners, as well as their respective capital accounts and tax basis capital. The form requires the partnership to report its total income, gains, losses, deductions, and credits for the tax year and the allocation of these items among the partners.

The partnership must also provide a detailed breakdown of its gross income, including income from business operations, rental income, capital gains or losses, and other income. The form also requires the partnership to report its total deductions, including ordinary and necessary business expenses, as well as any depreciation and amortization. The form also has sections for the partnership to report non-deductible expenses and the allocation of deductions among the partners.

Form 1065 also requires the partnership to report any capital gains or losses and allocate these items among the partners. The form also has a section for the partnership to report any foreign transactions and foreign tax credits, as well as any adjustments to income or deductions.

In addition to the financial information, the form also requires the partnership to provide information about any changes in the partnership during the tax year, such as changes in partners or the partnership’s address. The partnership must also attach a Schedule K-1 for each partner, which shows the partner’s share of the partnership’s income, gains, losses, deductions, and credits.

It is important to note that the IRS requires partnerships to keep accurate records of their financial transactions and to maintain complete and accurate books and records. This includes keeping detailed records of all income, expenses, and assets and any partnership agreements or other documents relevant to the partnership’s tax return.

In addition, the partnership must keep records of each partner’s capital account, which is the partner’s share of the partnership’s capital. The partnership must also provide each partner with a Schedule K-1, which shows the partner’s share of the partnership’s income, gains, losses, deductions, and credits.

Overall, IRS Form 1065 is a crucial document for partnerships in the United States to report their income and financial activity to the IRS. Partners need to understand the requirements of the form and ensure that they have accurate and complete financial records to support their tax returns. Internal Revenue Code cites:

Section 6031(a) – Requires partnerships to file Form 1065
Section 6041(a) – Requires partnerships to keep records of gross income
Section 6662(b)(6) – Penalties for partnerships that fail to file Form 1065 or maintain accurate records.