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The IRS has created a page on IRS.gov for information about Schedule C (Form 1065) and its instructions, at www.irs.gov/form1065. Information about any future developments affecting Schedule C (Form 1065) (such as legislation enacted after we release it) will be posted on that page.
Use Schedule C (Form 1065) to provide answers to additional questions for filers of Schedule M-3 (Form 1065), Net Income (Loss) Reconciliation for Certain Partnerships.
Schedule C (Form 1065) must be filed by all partnerships that file Form 1065, U.S. Return of Partnership Income, and are also filing Schedule M-3 (Form 1065). Attach Schedule C (Form 1065) to Form 1065.
Certain transfers to a partner are made within two years of a transfer of property by the partner to the partnership;
Certain debt is incurred by a partner within two years of the earlier of:
A written agreement to transfer or
A transfer of the property that secures the debt, if the debt, nevertheless, is treated as a qualified liability; or
Transfers from a partnership to a partner occur which are the equivalent to those listed in 1 or 2 above.
P, a partnership, joins with B, an individual, in forming the PB partnership. P and B each contribute $50,000 cash to PB partnership. Profits and losses are split 50/50, with the exception of depreciation, which is allocated 99% to P and 1% to B. P answers “Yes” to question 2 because its 99% allocation of depreciation deductions from PB partnership is disproportionate to its ratio of sharing other items from PB partnership.
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