3.11.15 Return of Partnership Income

Manual Transmittal

November 03, 2017

Purpose

(1) This transmits revised IRM 3.11.15, Returns and Documents Analysis - Return of Partnership Income.

Material Changes

(1) Minor editorial changes have been made throughout this IRM (e.g., line number updates, spelling, punctuation, links, etc.). Other significant changes to this IRM are shown below:

(2) - Program Scope - Added Internal Controls to this Section. As a result, some information may have been moved or rearranged.

(3) IRM 3.11.15.1.10(1) - IRM Deviation Procedures - Corrected the title per feedback during IRM Review.

(4) IRM 3.11.15.1.11(1) and (2) - Taxpayer Advocate Service (TAS) - Moved information from paragraphs (1) and (2) into paragraphs (1) through (5). (05-17-2017)

(5) IRM 3.11.15.2.1(8) - General Editing Guidelines - Added "Note" to paragraph (8), Changed "Notes" under paragraph (8)l to paragraphs m) and n). Deleted line numbers for Form 1040, Schedule F.

(6) IRM 3.11.15.2.1(8)l) Note - General Editing Guidelines - Changed instructions to include prior year returns (2 preceding years) and deleted instructions to stop processing Schedules K-1 after November 30.

(7) IRM 3.11.15.2.2 (4) Table - Edit Marks - Added "Example" in first row, editing the "X" when correcting taxpayer entries and created new row for" slash(/)" edit mark. (IPU 17U0316 issued 02-15-2017)

(8) IRM 3.11.15.2.3(4)6) - Action Codes - Deleted "Exception" in paragraph (4)6) and added table in new paragraph (5).

(9) IRM 3.11.15.3.1.1(4) - Correspondence Imaging System (CIS) Returns - Rearranged table information in paragraph (4) for better clarity.

(10) IRM 3.11.15.3.1.2(3) - Use of Fax for Taxpayer Submissions - Changed "Caution" to Paragraphs (4) and (5) and added bullet lists.

(11) IRM 3.11.15.3.1.2(3) Caution - Use of Fax for Taxpayer Submissions - Changed IRM 11.3.2.6.1 reference to IRM 11.3.2.7.1. (IPU 17U0316 issued 02-15-2017)

(12) IRM 3.11.15.3.4(4)3) - Criminal Investigation (CI) Referral - Added mail stop for Kansas City.

(13) IRM 3.11.15.4.1 - Routing Guide for Attachments - Added mail stops for Kansas City.

(14) IRM 3.11.15.4.1(2) - Routing Guide for Attachments - Added Accounts Management (AM) instructions for Letter 112C. (IPU 17U1277 issued 08-28-2017)

(15) IRM 3.11.15.4.1(2) - Routing Guide for Attachments - Added clarification to Request for money transfer instructions.

(16) IRM 3.11.15.4.1(3) - Routing Guide for Attachments - Revised instruction for Form 3520 and Form 3520-A to include Yes/No criteria and send Letter 86C.

(17) IRM 3.11.15.4.1(3) - Routing Guide for Attachments - Added IRM reference for Form 4255.

(18) IRM 3.11.15.4.1(3) - Routing Guide for Attachments - Changed address for Form 8453-B and Form 8453-PE. Deleted Form 8453-P.

(19) IRM 3.11.15.4.1(3) - Routing Guide for Attachments - Added restricted information to Form 8594.

(20) IRM 3.11.15.4.1(3) - Routing Guide for Attachments - Added "unsigned" to Form 8804.

(21) IRM 3.11.15.4.1(3) - Routing Guide for Attachments - Added "See also" reference to Form 8833. (IPU 17U0410 issued 03-02-2017)

(22) IRM 3.11.15.4.1(3) - Routing Guide for Attachments - Clarified instructions for Form 8865. (IPU 17U1307 issued 09-05-2017)

(23) IRM 3.11.15.4.1(3) - Routing Guide for Attachments - Changed instruction to include prior year returns for Form 8938/CCC "2" . (IPU 17U0462 issued 03-08-2017)

(24) IRM 3.11.15.4.1(3) - Routing Guide for Attachments - Deleted instructions for Form 8941 and added IRM reference.

(25) IRM 3.11.15.4.1 - Routing Guide for Attachments - Added Form 9100, Notice of Late Election.

(26) IRM 3.11.15.4.1(3) - Routing Guide for Attachments - Added Form 14039-B, Identity Theft Affidavit - Business to Routing Guide. (Start-Up IPU 17U0005 issued 01-02-2017)

(27) IRM 3.11.15.4.1(3) - Routing Guide for Attachments - Added IRM references to Form 1065, Schedule D.

(28) IRM 3.11.15.5.1 - Statute Returns - Deleted "Exception" and added information into paragraph (3).

(29) IRM 3.11.15.5.3.1(2)b) Note - IRC 6020(b) - Prepared by Collections - Changed verbiage in "Note" .

(30) IRM 3.11.15.5.3.3 - Examination Prepared - Changed the title to agree with consistency sections.

(31) IRM 3.11.15.5.4(6) - Re-entry Document Procedures - Deleted instructions in paragraph (6). (IPU 17U0901 issued 05-24-2017)

(32) IRM 3.11.15.5.5(5) - Amended Returns - Added paragraph (5) to include instructions to detach Schedules K-1. (IPU 17U0047 issued 01-05-2017)

(33) IRM 3.11.15.5.5 - Amended Returns - Changed instructions to include prior year returns (2 preceding years) and deleted instructions to stop processing Schedules K-1 after November 30.

(34) IRM 3.11.15.5.6.2(2) - Common Trusts - Added "Note" to paragraph (2).

(35) IRM 3.11.15.5.6.4(3) - Inactive Returns - Deleted "Exception" .

(36) IRM 3.11.15.6(2) - Received Date - Added "Note" to paragraph (2) defining delivery services. (IPU 17U0047 issued 01-05-2017)

(37) IRM 3.11.15.6(2) Table - Received Date - Added reference to IRM 3.10.72, Receiving, Extracting and Sorting to mention "designated" Private Delivery Services (PDS).

(38) IRM 3.11.15.7(1)(3) Note - Signature - Revised instructions to match consistency Instructions.

(39) IRM 3.11.15.7 - Signature - Added instructions (paragraph (7)) for invalid signatures.

(40) IRM 3.11.15.8.5(1) Table - Change in Accounting Period - Changed wording for TC 059, TC 058 and Form 8716.

(41) IRM 3.11.15.8.6(3) - Early Filed Returns - Added, route to Entity Control using Form 13934, Entity Document/C&E Merge Transmittal) as part of local procedures.(IPU 17U1117 issued 07-10-2017 and IPU 17U1144 issued 07-14-2017)

(42) IRM 3.11.15.9.1(1) - Bankruptcy - Added, "route to Entity Control using Form 13934, Entity Document/C&E Merge Transmittal)" as part of local procedures.(IPU 17U1117 issued 07-10-2017 and IPU 17U1144 issued 07-14-2017 )

(43) IRM 3.11.15.9.2 - Entity Perfection - Employer Identification Number (EIN) - Added "route to Entity Control using Form 13934, Entity Document/C&E Merge Transmittal)" as part of local procedures. (IPU 17U1117 issued 07-10-2017 and IPU 17U1144 issued 07-14-2017 )

(44) IRM 3.11.15.9.3(3) - Entity Perfection - Name Control - Added paragraph (3) to include Name Control instructions for EINs assigned by the MODI-EIN program. (Start-Up IPU 17U0005 01-02-2017)

(45) IRM 3.11.15.9.3(4)(5) - Entity Perfection - Name Control - Added "route to Entity Control using Form 13934, Entity Document/C&E Merge Transmittal)" as part of local procedures. (IPU 17U1117 issued 07-10-2017 and IPU 17U1144 issued 07-14-2017)

(46) IRM 3.11.15.9.5(3) - Entity Perfection - Domestic Address - Added "route to Entity Control using Form 13934, Entity Document/C&E Merge Transmittal)" as part of local procedures. (IPU 17U1117 issued 07-10-2017 and IPU 17U1144 issued 07-14-2017)

(47) IRM 3.11.15.15.7(1) - CCC "L" - Treaty Based Positions - Added: "Taxpayer writes Section 6114 Election on the return" to Computer Condition Code (CCC) "L" . (IPU 17U00410 issued 03-02-2017)

(48) IRM 3.11.15.15.13 - CCC "X" Refund/Settlement Freeze - Changed "Title" .

(49) IRM 3.11.15.15.16(1) - CCC "2" - Statement of Foreign Financial Assets - Changed instruction to include prior year returns for Form 8938/CCC "2" . (IPU 17U0462 issued 03-08-2017)

(50) IRM 3.11.15.15.21CCC "8" - Section 761(a) Returns - Added "and has been selected or accepted by exam" .

(51) IRM 3.11.15.16(3) Note Line I - Number of Schedules K-1 (or Number of Partners) - Changed instructions to include prior year returns (2 preceding years) and deleted instructions to stop processing Schedules K-1 after November 30.

(52) IRM 3.11.15.16(4) Table Line I - Number of Schedules K-1 (or Number of Partners) - Changed instructions to include prior year returns (2 preceding years).

(53) IRM 3.11.15.16(4) Table Line I - Number of Schedules K-1 (or Number of Partners) - Added Foreign Entities to table.

(54) IRM 3.11.15.16(5) Table Line I - Number of Schedules K-1 (or Number of Partners) - Clarified instructions for corresponding for Schedule K-1s.

(55) IRM 3.11.15.16(6) Table Line I - Number of Schedules K-1 (or Number of Partners) - Revised instructions in Table and moved Paragraph (7) before (8).

(56) IRM 3.11.15.19.1(10)d - Audit Codes - Revised Audit Code "7" instructions for Form 8621. (IPU 17U0316 issued 02-15-2017)

(57) IRM 3.11.15.21.1 - Line 1 - Gross Receipts or Sales, Returns and Allowances, and Merchant Card and Third Party Payments (TY2011 only) - Changed title to Line 1 - Gross Receipts or Sales.

(58) IRM 3.11.15.21.2(2) - Line 2 - Cost of Goods Sold (Form 1125-A) - Added instruction to table to Dummy Form 1125-A.

(59) IRM 3.11.15.21.2(4) - Line 2 - Cost of Goods Sold (Form 1125-A) - Deleted Paragraph (4), old information only.

(60) IRM 3.11.15.22.12(2) - Line 20 - Other Deductions - Changed the word "schedule" to "statement" .

(61) Created two sections IRM 3.11.15.22.15, Publicly Traded Partnership and IRM 3.11.15.22.16, Qualifying Therapeutic Discovery Project (QTDP).

(62) IRM 3.11.15.23.14(2) - Number of Form 5471, Information Return of U. S. Persons With Respect to Certain Foreign Corporations, attached to this return (Question 19) - Added a table and revised instructions.

(63) IRM 3.11.15.23.15 - Form 8938 - Statement of Specified Foreign Financial Assets (Question 22) - Added additional instructions for processing Form 8938. (IPU 17U0154 issued 01-23-2017)

(64) IRM 3.11.15.23.15(3) - Form 8938 - Statement of Specified Foreign Financial Assets (Question 22) - Changed instruction to include prior year returns for Form 8938/CCC "2" . (IPU 17U0462 issued 03-08-2017)

(65) IRM 3.11.15.31Schedule D (Form 1065) - Capital Gains and Losses - Added instructions to table for Schedule D.

(66) IRM 3.11.15.32(8)(9) - Form 1125-A, Cost of Goods Sold (previously Form 1065, Schedule A) - Clarified instructions for dummying Form 1125-A.

(67) IRM 3.11.15.49.12 - CCC "X" - Refund/Settlement Freeze - Added cross reference to Form 1065 CCC "X" instructions.

(68) IRM 3.11.15.55.3(4) - Line 2 - Cost of Goods Sold - Deleted Paragraph (4), old information only.

(69) IRM 3.11.15.55.3(2) - Line 2 - Cost of Goods Sold - Added instruction to table to Dummy Form 1125-A.

(70) IRM 3.11.15.60(1)b) Table - Schedule K, Form 1065-B - Deleted instruction to edit CCC "3" .

(71) IRM 3.11.15.65 - Form 1125-A, Cost of Goods Sold (previously Form 1065-B, Schedule A) - Deleted instructions in this section and instead referenced Form 1065 instructions.

(72) IRM 3.11.15.67 - Form 8941, Credit for Small Employer Health Insurance Premiums - Deleted instructions and added reference to Form 1065 instructions.

(73) IRM references updated throughout the IRM.

(74) Figures revised throughout the IRM.

(75) Exhibits revised throughout the IRM.

Effect on Other Documents

IRM 3.11.15, Returns and Documents Analysis - Return of Partnership Income, dated October 18, 2016 (effective January 1, 2017), is superseded. This IRM also incorporates the following IRM Procedural Updates (IPUs) - 17U0005 (issued 01-03-2017), (issued 01-05-2017) , 17U0047 (issued 01-05-2017), 17U0154 (issued 01-23-2017), 17U0316 (issued 02-16-2017) , 17U0410 (issued 03-01-2017), 17U0462 (issued 03-08-2017), 17U0901 (05-24-2017), 17U1117 (issued 07-10-2017), 17U1144 (issued 07-14-2017), 17U1277 (issued 08-28-2017) and 17U1307 (issued 09-05-2017).

Audience

Wage and Investment (W&I) Code and Edit Tax Examiners

Effective Date

(01-01-2018)

Linda J. Brown
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. This IRM section provides instructions for Wage and Investment (W&I)Tax Examiners to process Form 1065, U.S. Return of Partnership Income and Form 1065-B, U.S. Return of Income for Electing Large Partnership returns.

  2. Purpose: The purpose of Document Perfection is to Code and Perfect (Edit) documents.

  3. Audience: These procedures apply to employees responsible for coding and editing returns contained in this IRM including:

    • Clerks, Lead Clerks and Supervisory Clerks

    • Tax Examining Technicians, Lead Tax Examining Technicians and Supervisory Tax Technicians

  4. Policy Owner: Director, Submission Processing.

  5. Program Owner: Paper Processing Branch, Business Master File (BMF) Section.

  6. Primary Stakeholders: Other areas that may be affected by these procedures include (but not limited to):

    • Accounts Management (AM)

    • Chief Counsel (CC)

    • Compliance

    • Information Technology (IT) Programmers

    • Large Business and International (LB&I)

    • Modernized E-File (MeF)

    • Small Business Self-Employed (SBSE)

    • Statistics of Income (SOI)

    • Submission Processing (SP)

    • Taxpayer Advocate Service (TAS)

    • Tax Exempt and Government Entities (TEGE)

  7. Program Goals: Ensure all necessary action is taken on the return and attachments to ensure correct posting of the return data.

Background

  1. The purpose of Document Perfection is to code and edit (perfect) returns and other documents for input to the Master File (MF) through the Integrated Submission and Remittance Processing System (ISRP) or the Service Center Recognition Image Processing System (SCRIPS). In addition, Document Perfection forwards any other documents or attachments not related to the processing of the returns to the function responsible for handling them.

  2. It is not the purpose of Code and Edit to mathematically verify or to check the validity of the returns and other documents being processed unless otherwise specified in the applicable section. The computer and/or Error Correction (Resolution) will perform these functions if the returns and other documents are coded and edited as prescribed in the applicable subsections of this section.

Authority

  1. Authority for these procedures is found in the following sections of the Internal Revenue Code and their corresponding Treasury regulations:

    • IRC 6031(a)

Responsibilities

  1. The Campus Director is responsible for monitoring operational performance for their campus.

  2. The Operations Manager is responsible for monitoring operational performance for their operation.

  3. The Team Manager/Lead is responsible for performance monitoring and ensuring employees have the tools to perform their duties.

  4. The Team Employees are responsible to follow the instructions contained in this IRM and maintain updated IRM procedures.

Program Management and Reviews

  1. Program Reports: The Batch/Block Tracking System (BBTS) stores a vast amount of data which can be used in performance monitoring and production projections.

  2. Program Effectiveness: The program goals are measured using the following methods:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial reviews

Program Controls

  1. Quality Review conducts a statistical valid sample size review of completed work to ensure IRM guidelines are followed.

Terms/Definitions/Acronyms

  1. For Terms, Definitions and Acronyms, See Exhibit 3.11.15-6

Related Resources

  1. The following is a list of related resources:

    • Servicewide Electronic Research Program (SERP)

    • Submission Processing Design Center (SPDC)

    • Integrated Data Retrieval System (IDRS)

IRS Employee Contacts - RRA 98 IRC 3705(a)

  1. The Restructuring and Reform Act of 1998, RRA 98 IRC 3705(a), provides identification requirements for all IRS employees working tax related matters. IRS employees are required to give their name and unique identification number during taxpayer telephone, face-to-face and written contact. In addition, a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

  2. All IRS employees who communicate by telephone, correspondence, or face-to-face with taxpayers or their personal representatives on tax-related matters are required to provide (at a minimum) the following information:

    1. Telephone Contact - Their title (e.g., Mr., Mrs., Ms., Miss), last name, and badge identification (ID Card) number.

    2. Face-to-Face Contact - Their title (e.g., Mr., Mrs., Ms., Miss), provided as appropriate during the conversation, their last name, and badge identification (ID Card) number.

    3. Correspondence - All correspondence must include a telephone number that taxpayers can call for answers to any questions they may have. In addition, manually generated and handwritten correspondence must have the employee’s title (e.g., Mr., Mrs., Ms., Miss), last name, and IDRS (Integrated Data Retrieval System) number, letter system number, or their badge identification (ID Card) number.

    4. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the badge identification (ID Card) number must be used. Toll-free employees may also provide their location for identification purposes. Faxes to taxpayers on tax related matters is considered manually-generated correspondence and must include the required information.

    5. Correspondence, whether sent directly to the taxpayer or to the taxpayer's personal representative, must contain the required information.

    6. When a taxpayer requests to speak with a specific employee who previously handled their inquiry or request, or complains about the level of service previously provided, every attempt should be made to resolve the taxpayer's inquiry. If the issue cannot be resolved, the employee should refer the inquiry using established procedures to his or her manager.

    7. Correspondex letters will require a specific employee name and telephone number only if the employee initiating the correspondence is in the best position to respond to any questions that the taxpayer may have about the correspondence, or if the employee is asking the taxpayer to provide additional case-related information.

    8. Otherwise, if the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number and standard signature.

    9. Secretaries, receptionists or other people who answer the telephone in functional offices need to identify themselves and should provide their badge identification (ID Card) number only if they are answering telephones which are routinely used to provide tax or account information.

    10. It is not necessary to repeat the badge identification (ID Card) number on a subsequent taxpayer contact, when the nature of an employee's work involves multiple contacts, with the same taxpayer and the employee has given the taxpayer (either telephone or in-person) his or her badge identification (ID Card) number on the first contact.

    Note:

    The Taxpayer Bill of Rights (TBOR) was adopted by IRS in June 2014 and provides that taxpayers have the right to receive prompt, courteous and professional assistance in their dealings with the IRS. They are to be spoken to in a way that is easily understood and any correspondence from the IRS must be clear and understandable. They have the right to speak to a supervisor whenever quality service is not received.

♦BMF Master File (BMF) Consistency♦

  1. The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Code and Edit processing IRMs.

  2. Topics for the BMF Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden, and Paper Processing Branch BMF Code and Edit/ERS.

  3. BMF Consistency subsections are identified by a ♦ (diamond) before and after the title.

  4. Text in normal print is the common processes for BMF returns. Text in BOLD print is form specific and applies to this IRM only.

♦IRM Deviation Procedures♦

  1. IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2.4, When Procedures Deviate from the IRM, and elevated through appropriate channels for executive approval.

♦Taxpayer Advocate Service (TAS)♦

  1. Per the Taxpayer Bill of Rights (TBOR), taxpayers have the right to expect a fair and just tax system which provides taxpayers with the opportunity to have their facts and circumstances considered when it might affect their underlying liabilities, ability to pay, or ability to provide information timely.

  2. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service (TAS) if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through normal channels. For additional information on the Taxpayer Bill of Rights, visit http://taxpayeradvocate.irs.gov/About-TAS/Taxpayer-Rights.

  3. Refer taxpayers to TAS when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria), or when Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), is attached and steps cannot be taken to resolve the taxpayer's issue the same day.

  4. "Same day" includes cases that can be resolved in 24 hours, as well as cases where steps can be taken within 24 hours to begin resolving the issue. (See also IRM 13.1.7.4, Same Day Resolution by Operations.)

  5. When making a TAS referral, use Form 911, and forward to TAS in accordance with your local procedures.

♦TAS Service Level Agreement (SLA)♦
  1. The National Taxpayer Advocate has reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business and Self Employed (SB/SE) Division, Tax Exempt and Government Entities (TE/GE), Criminal Investigations (CI), Appeals, and Large Business and International (LB&I) that outline the procedures and responsibilities for the processing of Taxpayer Advocate Service (TAS) casework when either the statutory or delegated authority to complete case transactions rests outside of TAS. These agreements are known as Service Level Agreements (SLAs).

  2. The SLAs are located at http://tas.web.irs.gov/policy/sla/default.aspx

♦Foreign Currency♦

  1. For returns completed in other than U.S. currency, process as filed. However, if corresponding for missing/incomplete item(s), include instructions in the letter to resubmit in U.S. currency.

Form 1065, U.S. Return of Partnership Income (Program #12200)

  1. Form 1065, U.S. Return of Partnership Income, is an information return used to report the income, deductions, gains, losses, etc., from the operation of a partnership. A partnership does not pay tax on its income but "passes through" any profits or losses to its partners. Partners must include partnership items on their tax returns.

    Exception:

    Partnership returns identified as a "PUBLICLY TRADED PARTNERSHIP" will pay a tax on income derived from the active conduct of all trades and businesses of the partnership (per IRC 7704(g)(3)(A)). These returns will have the annotation ""3.5% GROSS INCOME TAX" " on the return or attachment or between Lines 21 and 22 of the Form 1065 (below the Ordinary Business Income (Loss) amount). (See IRM 3.11.15.22.15).

  2. The due date for a partnership return is the 15th day of the 3rd month following the close of the taxable year. March 15th is the due date for a calendar year return.

  3. Beginning January 1, 2001, partnerships with more than 100 partners were mandated to file Form 1065, U.S. Return of Partnership Income, electronically. The electronic filing was mandatory beginning with tax year 2000 returns and filed in 2001.

General Editing Guidelines

  1. The following general information can be used when editing Form 1065 returns.

  2. General instructions eliminate repetition of the same instructions for each return. If the general instructions and the specific instructions conflict, follow the specific instructions.

  3. All money amounts must be edited in dollars only.

    Reminder:

    Do not edit a vertical line, 00, dash or decimal point in a dollars and cents field when the partnership has entered dollars only.

  4. Do not edit brackets or parentheses around amounts clearly indicated to be negative by the presence of a minus sign (-).

    Reminder:

    It will be necessary to bracket negative amounts when editing negative entries on transcription lines (i.e., computing and entering a line entry, entering a missing line entry, etc.).

  5. Reference is made throughout this IRM to "significant entries" . A significant entry is defined as any amount other than zero.

    Note:

    "Blank, Dash, "None" , "N/A" , or zero are not significant entries."

  6. Instructions for editing Schedules K-1 are in IRM 3.0.101, General - Schedule K-1 Processing.

  7. Received date is edited in MMDDYY format.

  8. The proper presentation of income and deduction items for subsequent input by the Integrated and Remittance Processing System (ISRP) and computer processing is essential. Document Perfection is responsible for arranging the return in the following order:

    Note:

    It is not necessary to sequence Form 1040, Schedule F, Form 1065, Schedule D, Form 1125-A, Form 8825, Form 8913, Form 8938, Form 8941 or Form 5884-B if there are no transcription line entries.

    1. Form 1065, page 1

    2. Form 1065, page 2

    3. Form 1065, page 3

    4. Form 1065, page 4

    5. Form 1065, page 5

    6. Schedule F (Form 1040), Profit or Loss From Farming

    7. Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation

    8. Schedule D (Form 1065), Capital Gains and Losses

    9. Form 1125-A, Cost of Goods Sold

    10. Form 8913, Credit For Federal Telephone Excise Tax Paid

    11. Form 8941, Credit For Small Employer Health Insurance Premiums

    12. Form 5884-B, New Hire Retention Credit

    13. Place all Schedules K-1(Form 1065), filed as attachments to Form 1065, as the last attachment in the package or follow local agreement. Detach current year (TY2017), two preceding years (TY2016 and TY2015) and future Schedules K-1. See IRM 3.0.101, for Schedule K-1 editing procedures.

    14. Form 8938, Statement of Specified Foreign Financial Assets - Sequence Form 8938 to the back of the last page of Form 1065 (after schedules and attachment pages), attaching the Form 8938 so that it is back- to- back with the parent return.

  9. If a current year (2017) return or a prior year return is filed on a tax form for other than the current tax year revision, convert the tax return to the current year format using the prior year conversion charts found in job aid (Number 2505-002).

♦Edit Marks♦

  1. Edit marks are edited on the return for transcription to the Automated Data Processing (ADP) System through ISRP. The editing can be entered in brown, red, orange, purple, or green pencil/pen.

  2. The only items edited on the return are those to be transcribed except where specific instructions require editing of a non-transcribed item. Lines are left blank if the entry would be a zero amount unless otherwise instructed.

  3. The original entry on a return is never obliterated, altered, or erased when deleting or correcting an entry. Always exercise care to ensure that the original entry remains legible. Perfected entries provide a legible "edit trail" for anyone who may work with the return later.

  4. For a description of specific edit marks, See the table below:

    Edit Marks Description
    "X" The "X" is used to delete tax data or to indicate that an item is not to be transcribed. For example, If deleting an original taxpayer entry, edit an X to the left of the entry to be deleted. Edit the correct entry to the left or above the X
    / A / can be used when deleting a form or schedule not being transcribed.
    "//$" The "//$" is used in the entity area to identify the beginning and ending of a foreign country code. For example, "/EI/$" is edited for "Ireland" or "/GM/$" is edited for "Germany" .
    "c/o" or "%" Indicates an "in-care of" name for transcription.
    Circle Indicates that an entry is not to be transcribed. Also used to delete entity data or a received date.

    Note:

    If the taxpayer circles an entry, edit the entry.

    Underline Indicates that an entry is to be transcribed (e.g., Name Control, Tax Period, etc.).
    Arrow Indicates the correct placement of a misplaced entry. An arrow may be used if the misplaced item is close to the correct line and there is no question where the entry belongs.

    Note:

    A double arrow may be used if the same figure is to be transcribed in two different places (along with any required transcription data between the two arrows).

    Check Mark Indicates that an entry has been manually math verified and is correct.
    Bracket/Parenthesis Indicates a negative numerical amount.

    Note:

    C&E is not required to bracket negative amounts when brackets are preprinted on the form or schedule or when the taxpayer clearly indicates a negative amount with brackets "()" or "-" sign. It will be necessary to bracket negative amounts when editing negative entries on transcription lines (e.g., computing and entering a line entry, entering a missing line entry, etc.).

    Vertical Line or Decimal Point Indicates the separation of dollars and cents.
    Zero, Dash, None, or N/A "ZERO" , "DASH" , "NONE" , or "N/A" are considered valid entries except when specific instructions require editing of an entry.
    Edit Marks Made by Other IRS Functions Edit marks entered by other areas, such as Collections, Entity or Accounts Management, are not to be re-edited except to place the marks in the correct area or to perfect for legibility. Do not edit (or write) over another area's edit marks.

    Exception:

    Photocopied Returns

    Photocopied Returns Re-edit or underline any valid, black edit marks. See IRM 3.11.15.3.1.1, Correspondence Imaging System (CIS) Returns, and IRM 3.11.15.5.4Re-Entry Document Procedures
    Rocker Indicates the amount paid when drawn under a remittance amount.

♦Action Codes♦

  1. Action Codes are used to indicate whether correspondence, research or some other action is needed. The Action Code will set the suspense period to be assigned to the return and place the return in the workable or unworkable suspense inventory.

  2. When necessary, a three-digit Action Code will be assigned by the tax examiner.

  3. Edit the Action Code in the bottom left margin of the return.

  4. Assign Action Codes in the following priority:

    1. Action Code 310 (Statute Control)

    2. Action Code 320 (Entity Control)

    3. Action Code 4XX

    4. Action Code 6XX

    5. Action Code 3XX

    6. Action Code 2XX (Correspondence)

  5. Use the following table if more than one Action Code is needed:

    If ... Then ...
    Action Codes include 211, 215, 225 or 226 and Action Code 341,
    1. Edit the Action Code 211, 215, 225 or 226 on the Form 1065 or Form 1065-B.

    2. Edit Action Code 341 on the Form 4227, Intra-SC Reject or Routing Slip.

    Action Codes have the same priority,
    1. Edit the Action Code with the shorter suspense period on the Form 1065 or Form 1065-B.

    2. Edit the second Action Code on the Form 4227, Intra-SC Reject or Routing Slip.

    3. See IRM 3.11.15.2.3(8), Action Codes for suspense periods.

    Action Codes have different priorities,
    1. Edit the Action Code with the higher priority on the Form 1065 or Form 1065-B.

      Exception:

      Use Action Code 211, 215, 225 or 226 before Action Code 341 to ensure the return is complete before a manual refund is issued.

    2. Edit the second Action Code on the Form 4227, Intra-SC Reject or Routing Slip.

  6. Edit the following Action Codes when a return cannot be perfected:

    Action Code Description
    211 (First Correspondence) or 215 (International Correspondence)
    • Return is illegible, incomplete or contradictory and therefore cannot be processed.

    • The taxpayer notates on the return or attachment that they are reporting tax for more than one Tax Period or for more than one type of tax.

    225 (Missing Signature Correspondence)
    • Unsigned return (only issue for correspondence).

    226 (Missing Signature International Correspondence)
    • Unsigned foreign return (only issue for correspondence).

    480 (Early Filed Suspense)
    • Early filed return.

    610 (Renumbered non-remittance) or
    611 (Renumbered with remittance)
    • A return is mis-blocked (e.g., Form 1065 is found in a Form 1120 batch of work).

    640 (Void)
    • To delete the assigned DLN on the return (e.g., Re-entry Returns).

    650 (International)
    • An international return that must be forwarded to Ogden Submission Processing Center (OSPC).

  7. Continue perfecting the return after editing the Action Codes.

  8. Valid Action Codes are listed below:

    Action Code Description Workday Suspense Period
    211 First Taxpayer Correspondence 40
    212 Second Taxpayer Correspondence 25
    215 International Correspondence 45
    225 Taxpayer Correspondence (signature only) 40
    226 International Correspondence (signature only) 40
    310 Statute Control 10
    320 Entity Control 10
    331 Frivolous Review 3
    341 Manual Refund 10
    342 Credit Verification 10
    343 Black Liquor

    Reminder:

    See IRM 3.11.15.2.3(8),Action Codes below.

    10
    352 Name Research 3
    360 Other-in-House Research 10
    420 Management Suspense A (Tax return with TETR credit) 5
    440 Management Suspense C
    (LB&I review of 1120-F in OSPC only)
    15
    450 Management Suspense D 20
    480 Early Filed Suspense 150
    610 Renumber Non-remit 0
    611 Renumber Remit 0
    640 Void 0
    650 International 0
  9. IMPORTANT (regarding "Black Liquor" Claims on Form 1065 returns): This special processing only applies to Tax Years 200901 through 201011. DO NOT edit Action Code 343 (Other Accounting) on any Form 1065 for Tax Period 201012 or later.

Perfecting Unprocessable Documents

  1. Perfect all documents if possible. Examine schedules and other attachments for the information necessary to make the document processable and edit the information on Form 1065.

  2. Form 4227, Intra-SC Reject or Routing Slip, must be attached on unprocessable documents when instructed in the IRM.

  3. When perfection is not possible on a numbered document:

    1. Edit to extent possible.

    2. Leave the document in the batch.

    3. Edit the appropriate action code on the bottom left hand corner of the return.

  4. When perfection is not possible on an unnumbered document:

    1. Discontinue editing.

    2. Withdraw the document from the batch.

    3. Use local procedures for review.

  5. If liability for two or more Form 1065 returns for the same tax class have been reported on one return and the information necessary for the preparation of the individual returns are present:

    1. Adjust line entries on the multiple period return to reflect liability for the earliest period and prepare additional period returns.

    2. Retain all the unnumbered returns in the batch.

    3. If the original return is a numbered document, edit Action Code "360" on the bottom left hand corner of the front of the return and leave it in the block.

  6. If the Name Control cannot be determined on:

    1. Unnumbered - Follow local research procedures to obtain a Name Control. (See IRM 3.13.2, BMF Account Numbers)

    2. Numbered - Edit Action Code "320" for later routing to Entity Control.

  7. Employer Identification Number (EIN) other than nine digits, EIN missing, or multiple EINs:

    1. Unnumbered - Follow local research procedures to obtain EIN.

    2. Numbered - Edit Action Code "320" for later routing to Entity Control. See Figure 3.11.15-1 below.

  8. Return is misbatched -

    1. Unnumbered - Follow local procedures.

    2. Numbered - Edit Action Code "610" and leave in block.

  9. For all other conditions, initiate correspondence action when the document cannot be perfected from attachments or schedules.

    Figure 3.11.15-1

    This is an Image: 33495001.gif
     

    Please click here for the text description of the image.

♦Correspondence♦

  1. There are two types of correspondence that Code and Edit may encounter:

    1. Correspondence received from taxpayers, and

    2. Correspondence issued to taxpayers.

  2. Correspondence is all written communications from a taxpayer or his/her representative, excluding tax returns, whether solicited or unsolicited. This includes:

    1. Written communications in response to IRS requests for information or data.

    2. Written communications, including annotated notice responses, which provide additional information or dispute a notice.

    3. A telephone call that results in a written referral or research (Form 4442, Inquiry Referral).

  3. The key to identifying taxpayer correspondence is to ask the following questions:

    1. Is taxpayer waiting for a response from us?

    2. Is taxpayer waiting for an action to be taken by us?

    3. Is taxpayer asking a question?

    Note:

    A Post-It-Note, Sticky Note, or some other type of note stuck on the return by another function does not constitute correspondence from the taxpayer. For instance the note may state something like the following: "Taxpayer (TP) requests penalties be waived" .

  4. Issue correspondence to resolve any conditions causing the return to be unworkable or unprocessable.

    Exception:

    Do not correspond on returns prepared by Collections, IRC 6020(b) or by Examination, "Substitute for Return" (SFR).

    Exception:

    Do not correspond with the partnership, for missing information or attachments, when there is an indication on the return that no transactions transpired during the tax year. All entries are zero (0).

  5. If the return is incomplete and appears to be a duplicate, give the return to the lead. The lead will initiate research for a Transaction Code (TC) 150 and/or any other research necessary to determine if the return should continue to be processed or other actions taken. A duplicate return could include any of the following:

    • A one page return, with or without a signature.

    • Incomplete returns indicating "Payment Only" .

    • Incomplete returns indicating they have previously e-filed.

    Note:

    This list is not all inclusive. Tax examiners may see other unusual documents that are not addressed in this subsection or in other areas of the IRM.

  6. Examine the return so that all of the conditions can be included in the same correspondence.

    If... And... Then...
    Correspondence is needed, Requires a response,
    1. Complete approved Correspondence Action Sheet indicating the letter number (86C, 854C, 1355C, 3875C, etc.), MFT, and the appropriate paragraphs.

      Note:

      Within these paragraphs, there may be fill-ins that the tax examiner will be required to enter, such as, tax period, form number, DLN, etc.

    2. Attach the Correspondence Action Sheet to the front of the return below the entity area.

    3. Edit Action Code 211 (First Correspondence) or 215 (International Correspondence) on the return.

    4. Finish editing the return and leave in the batch.

    Correspondence is needed, Does not require a response,
    1. Complete approved Correspondence Action Sheet indicating the letter number (86C, 854C, 1355C, 3733C, 3875C, etc.), MFT, and the appropriate paragraphs.

      Note:

      Within these paragraphs, there may be fill-ins that the tax examiner will be required to enter such as tax period, form number, DLN, etc.

    2. Photocopy first page of the return and attach the Correspondence Action Sheet below the entity areas on the front of the copy of the return. Be sure the name and address shows clearly above the approved Correspondence Action Sheet.

    3. Forward the copy to the Correspondence area.

    4. Edit an Action Trail (e.g., "3875C Sent" ) in the lower left corner, vertically up the side of the return.

    5. Finish editing the return and leave in batch.

    Note:

    There may be additional letters that are exclusive to the Tax Examiner's campus. These letters are for specific forms or conditions where it was deemed necessary for processing. The Tax Examiner should go to the Lead or Manager for copies of these letters to facilitate processing.

♦Correspondence Imaging System (CIS) Returns♦
  1. Correspondence Imaging System (CIS) is an inventory system for scanning all Account Management (AM) receipts into digital images and working the cases from those images.

  2. "CIS" returns are identified with "CIS Image-Do not correspond for Signature" stamped below the signature line or "CIS" annotated on the front of the return.

  3. Verify all edit marks on a "CIS" return.

    If... Then...
    The edit marks are black, Underline the edit mark if correct, or circle if incorrect.
    The edit marks are red or green, Circle if incorrect.
    The edit marks are missing or incorrect, Perfect as necessary.
  4. Follow the instructions below for processing "CIS" returns:

    If... And... Then...
    The "CIS" return has Form 13596 attached, The return is incomplete (e.g., missing signature, schedules or forms),
    1. Do not correspond.

    2. Remove the return from the batch and route to AM.

    3. If the return comes back from AM with the information still incomplete, send the return to AM again to secure all the missing information. Indicate "Additional information needed to process incomplete CIS return," or similar language on Form 4227 (or other appropriate routing slip).

    The CIS return has a Form 13596 attached and the return is incomplete (e.g., missing signature, schedules, or forms), There is an indication on the return that correspondence has been sent (e.g., CCC 3 is edited on the return), Do not route the return to AM. Continue processing the return.
    The "CIS" return does not have Form 13596 attached, The return is incomplete (e.g., missing signature, schedules or forms), Follow normal correspondence procedures.
♦Use of Fax for Taxpayer Submissions♦
  1. Tax return information can be received via fax as part of return perfection even if a taxpayer signature is required. In circumstances where contact with the taxpayer has been made and documented, faxed signatures are acceptable. For more information about accepting signed taxpayer documents by fax, see the most recent revision of the IRS Policy for Use of Fax, available at http://irweb.irs.gov/AboutIRS/co/dese/memo/48254.aspx.

  2. Contact with the taxpayer may be by telephone or correspondence. Follow local procedures to determine which method of contact will be used.

  3. Code and Edit examiners will indicate the fax paragraph on the approved Correspondence Action Sheet to advise taxpayers of the option to fax their response.

  4. Use the following resources to make sure you are speaking with the taxpayer or authorized representative before disclosing any tax information:

    • IRM 21.1.3.2.3, Required Taxpayer Authentication

    • IRM 21.1.3.2.4Additional Taxpayer Authentication

  5. Before leaving any messages on a taxpayer's answering machine, review:

    • IRM 11.3.2.7.1, Leaving Information on Answering Machines/Voice Mail Fax

    • IRM 11.3.1.11, Facsimile Transmission of Tax Information

Foreign Address Returns (International)

  1. Ogden Submission Processing Center (OSPC) will process all Foreign Address returns.

  2. A Foreign Address is any address other than the 50 states and the District of Columbia.

  3. An Army Post Office (APO), Diplomatic Post Office (DPO) or Fleet Post Office (FPO) is not considered a foreign address. The Postal Service established new address requirements for the APO/DPO/FPO addresses.

  4. If an address appears in the old APO/DPO/FPO format, convert to the new State Code abbreviation based on the ZIP Code: For example, if the old address appears as "APO New York, NY 091XX" , convert to read as "APO AE 091XX" .

    ZIP Code State Code
    340 AA
    090-098 AE
    962-966 AP
  5. Route returns with a foreign address to OSPC for processing. Prepare Letter 86C to inform the partnership that the return has been sent. See Figure 3.11.15-2 below.

  6. U.S. Possessions/Territories - The following U.S. Possessions/Territories are considered Foreign Addresses and must be sent to OSPC for processing:

    U.S. Possession/Territory Abbreviation
    American Samoa AS
    Federated States of Micronesia FM
    Guam GU
    Marshall Islands MH
    North Mariana Islands MP
    Palau PW
    Puerto Rico PR
    Virgin Islands (U.S.) VI
  7. A ZIP Code must be present for U.S. Possessions/Territories. Edit the appropriate ZIP code if one is not provided. See Exhibit 3.11.15-1, U.S. Possessions/Territories ZIP Codes.

    Figure 3.11.15-2

    This is an Image: 33495002.gif
     

    Please click here for the text description of the image.

♦Frivolous Arguments♦

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 25.25.10, Frivolous Return Program (FRP), shown in Exhibit 3.11.15-4, Potential Frivolous Argument Criteria.

  2. Review the return to determine whether it appears to be a frivolous return.

    If... Then...
    The return meets any of the conditions identified as a frivolous return, (See Exhibit 3.11.15-4Potential Frivolous Argument Criteria),

    Exception:

    If the return shows Action Code 331 and has a Form 4227 attached with the remarks, "Refer to Exam FRP for audit after processing" , continue to next procedure,

    Remove return from the batch and place the return in the locally designated basket for Examination, Frivolous Return Program (FRP) for review.
    Examination has selected the return as frivolous, indicated by an Action Code 331 and a Form 4227 with the remarks "Refer to Exam FRP for audit after processing" but sends the return for processing, Continue processing the return using procedures in IRM 3.11.15. However, do not circle or void the Action Code indicating a frivolous return.

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ " ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

♦Criminal Investigation (CI) Referral♦

  1. Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC are willful attempts to evade or defeat the income tax. Flagrant criminal activity includes, but is not limited to, the failure to pay over taxes due and/or taxes collected or withheld and false claims for refunds based on bogus return information.

  2. For returns with refund claims of $100,000,000 or more, do the following:

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    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Other CI Referral Criteria:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
  4. For all other CI Referral criteria listed in paragraph (3), do the following:

    1. Make a copy of the return.

    2. Attach Form 4227 to the copy.

    3. Route the copy as indicated in the table below.

      Cincinnati Kansas City Ogden
      Mail Stop 83G, Criminal Investigation (CI) Mail Stop S2 9000, Criminal Investigation (CI) Mail Stop 9001, Criminal Investigation (CI)
    4. Edit an action trail "Copy to CI" , or "CI Referral" , or similar language in the lower left corner going vertically up the side of the return.

    5. Continue processing the return.

  5. If CI has stamped the return, no further CI action is required.

  6. If the return fits other criteria (e.g., Frivolous Argument), take appropriate action.

♦Examination (Exam) "Funny Box" ♦

  1. The primary objective in identifying tax returns for examination is to promote the highest degree of voluntary compliance. Examination will provide support and assist Submission Processing (SP) with any questionable return identified during processing. Exam has a vast multitude of programs and tolerance criteria already identified in various IRM sections. Exam does not restrict SP with the flexibility to refer questionable returns other than what is currently identified in various IRMs.

♦Protective Claims♦

  1. Returns marked as "Protective Claims" , "Protective Claim for Refund" , or similar statement will be removed from the batch and routed to Accounts Management. Notate "Protective Claim" in the remarks box of Form 4227.

    Exception:

    If the return is amended, do not remove from batch. Edit Computer Condition Code "G" and follow normal processing procedures.

♦BMF Identification (ID) Theft♦

  1. BMF Identification Theft is increasing. If a tax examiner in Submission Processing (SP) Code and Edit (C&E) finds a case with attachments or correspondence indicating the taxpayer is a victim of ID Theft, provide the whole case to your senior/lead. Your senior/lead will expedite the case to the P&A staff for referral to one of the SP BMF ID Theft liaisons. The taxpayer must indicate that they are a victim of "ID Theft" ; do not send cases that are subject to "Criminal Investigation" (CI), "Examination " (Exam), or "Fraud" review.

Examination of Attachments

  1. All attachments to the document being processed will be examined and action taken as required by the attachment.

  2. When an attachment has an effect on the document being processed, it will remain attached unless a specific instruction requires that it be detached.

    1. Notate any action taken on Form 1065 regarding attachments, photocopying, etc., (to leave an action/working trail).

    2. Refer to the Campus Mail Routing Guide for proper disposition of attachments not found in these instructions.

  3. If the document to be detached contains any information that is pertinent to the return being processed, photocopy or transfer the data to a blank piece of paper and attach it to the return.

  4. Forward any attachment requesting an adjustment or correspondence to Accounts Management Branch via Form 4227.

  5. Ensure the attachment contains the partnership name, address, EIN and received date.

♦Routing Guide for Attachments♦

  1. All attachments to the return must be reviewed before the return can be considered processable.

    1. Attachments should only be detached when specifically instructed.

      Note:

      Consider a return or document an "original" if it has an original signature or has been stamped "Process as Original" .

    2. Edit Action Trail(s) (e.g., "2848 DETACHED" ) in the lower left corner going vertically up the side of the return.

  2. Follow the general guidelines written below for each attachment:

    DOCUMENT DETACH ACTION
    CP 259/959 (Spanish version) NO Correspondence is attached or taxpayer’s response indicates any of the following:
    • Taxpayer disagrees that they are required to file the return.

    • Only page one of the return is attached.

    • EIN on notice does not match EIN on return.

    • Return requested on notice not the same as return submitted.

    • Taxpayer asking question(s) or requesting IRS take action(s) on their account.

    • Case involves any other IRS action(s) C&E not trained to complete.

    Then, Route to Compliance Services Collection Operations (CSCO). Use return address on CP notice;
    • Brookhaven - Stop #662

    • Memphis - Stop #81

    • Philadelphia - 4-N31.142


    If none of the above apply, correspondence or written response to the notice is not attached and/or, "599" is notated:
    1. Move the notice to the back of the return.

    2. Continue processing the return.

    Note:

    If the return is unsigned, but the taxpayer has signed the CP notice under the jurat, it is not necessary to correspond for the signature.

    CP 259 A through H NO OSPC BMF Entity
    Mail Stop 6273.
    CP 504/504B NO
    1. Pull CP 504 to the front.

    2. Route notice and return to Accounts Management.

    CP 518 NO Correspondence is attached or taxpayer’s response indicates any of the following:
    • Taxpayer disagrees that they are required to file the return.

    • Only page one of the return is attached.

    • EIN on notice does not match EIN on return.

    • Return requested on notice not the same as return submitted.

    • Taxpayer asking question(s) or requesting IRS take action(s) on their account.

    • Case involves any other IRS action(s) C&E not trained to complete.

    Then, Route to Compliance Services Collection Operations (CSCO). Use return address on CP notice;
    • Brookhaven - Stop #662

    • Memphis - Stop #81

    • Philadelphia - 4-N31.142


    If none of the above apply, correspondence or written response to the notice is not attached and/or, "599" is notated:
    1. Move the notice to the back of the return.

    2. Continue processing the return.

    Note:

    If the return is unsigned, but the taxpayer has signed the CP notice under the jurat, it is not necessary to correspond for the signature.

    Letters 112C, 282C, 2255C or 2284C NO
    1. Identify which organization initiated the letter to the taxpayer (e.g., what organization signed the letter?).

    2. Route letters initiated by Accounts Management (AM) to Accounts Maintenance Research (AMRH):

      • Ogden - Mail Stop 6712

      • Cincinnati - Mail Stop 534G

      • Kansas City - Mail Stop N2 6800

    3. Route letters initiated by Collections as follows:

      1. If correspondence is attached or taxpayer’s response indicates any of the following:

        • Taxpayer disagrees that they are required to file the return.

        • Only page one of the return is attached.

        • EIN on letter does not match EIN on return.

        • Return requested on letter not the same as return submitted.

        • Taxpayer asking question(s) or requesting IRS take action(s) on their account.

        • Case involves any other IRS action(s) C&E not trained to complete.

        Then, Route to Compliance Services Collection Operations (CSCO). Use return address on letter;

        • Brookhaven - Stop #662

        • Memphis - Stop #81

        • Philadelphia - 4-N31.142

      2. If none of the above apply, correspondence or written response to the notice is not attached and/or, no "599" is notated:
        Then, Move the letter to the back of the return and continue processing.

    Note:

    If the return is unsigned, but the taxpayer has signed the letter under the jurat, it is not necessary to correspond for the signature.

    Letter 2030 No Attach letter in front of return and route both to BMF Automated Underreporter (AUR) in compliance.
    Letter 2531 No Attach letter in front of return and route both to BMF Automated Underreporter (AUR) in compliance.
    Request for Account Adjustment YES Route to appropriate function. Attachment must contain Name, Address, EIN, and IRS Received Date. Edit if missing.
    Includes tax liability for Multiple Tax Periods or Types of Tax NO
    • Numbered returns route to Rejects.

    • Unnumbered returns, prepare a dummy return if possible: otherwise correspond.

    Other Tax Returns (original signature) YES
    1. Edit received date to the detached return.

    2. Route to appropriate function unless specifically directed otherwise.

      Exception:

      Returns attached to a consolidated return will NOT be detached.

    Petitions in opposition of tax law provisions Yes

    Note:

    No Action Trail needs to be edited when detaching a petition.

    Route to:
    IRS
    ≡ ≡ ≡ ≡ ≡
    1111 Constitution Avenue, NW
    Washington, DC 20224
    State Tax Returns YES/NO
    • YES - If original or copy, with an original signature, route to Receipt and Control.

    • NO - If photocopy, facsimile or no signature, leave attached.

    Statement establishing Reasonable Cause for delinquent filing NO
    1. Issue Letter 1382C.

      Exception:

      If the taxpayer is disputing or requesting an abatement or waiver of already assessed penalties and/or interest, do not issue Letter 1382C. See Routing Guide for "Request for Account Adjustment"

    2. Continue editing the return.

    Remittance found NO Immediately hand-carry return and remittance to supervisor.
    Request for Acknowledgement NO No action required.
    Request for information or inquiries YES
    1. Photocopy any data necessary to process the return.

    2. Attach the photocopy to the return.

    3. Route original attachment to the proper office for necessary action.

    Requests for Installment Agreements YES
    • Ogden - Route to Collections.

    • Cincinnati - Route to Receipt and Control (R&C).

    • Kansas City - Route to Mail Stop P4 5000

    Request for Adjustment to another document YES Route to appropriate function. Attachment must contain Name, Address, EIN and Received Date. Edit if missing.
    Request for money transfer NO/YES NO - Partnership notates transfer of money TO the return you are processing:
    1. Prepare Form 3465 and:

      1. Indicate "Rejects" in the Routing box.

      2. Notate "See attached money transfer request" in the Remarks box.

    2. Edit Action Code 450 to route the request to Rejects.



    YES - Partnership notates transfer of money FROM the return you are processing:
    1. Edit CCC "X" to freeze overpayment.

    2. Detach transfer request.

    3. Prepare Form 3465 and:

      1. Indicate "Adjustments" in the Routing box.

      2. Notate the requested action in the "Remarks box" .

    4. Attach Form 3465 to the request and route to Accounts Management.

    5. Continue editing the return.

    Request for Form 8109, Deposit Slips or Coupon Books NO No action required.
    Request for Forms or Schedules NO If requesting current year forms:
    1. Prepare Form 4190.

    2. Forward to National Distribution Center (NDC) for processing.


    If requesting prior year forms:
    1. Prepare Form 6112.

    2. Forward to National Distribution Center (NDC) for processing.

      Note:

      Form 4190 and Form 6112 are generally used for IMF requests. Therefore, enter all BMF requests for forms and/or schedules in the "WRITE-IN" portions of the forms.

  3. The table below contains routing instructions for specific forms and/or documents attached to Form 1065 or Form 1065-B.

    FORM/DOCUMENT DETACH ACTION
    SS-4, Application for Employer Identification Number YES/NO YES (Original) Route to Entity Control.
    NO (Copy) No action required.
    Form T, Forest Activities Schedules NO No Action.
    W-2, Wage and Tax Statement YES Route to Receipt and Control.
    W-2GCertain Gambling Winnings NO No Action.
    Form 433-B,Collection Information Statement for Businesses YES
    • Ogden - Route to Collections.

    • Cincinnati - Route to Receipt and Control (R&C).

    • Kansas City - Route to Mail Stop P4 5000

    Form 433-D,Installment Agreement YES
    • Ogden - Route to Collections.

    • Cincinnati - Route to Receipt and Control (R&C).

    • Kansas City - Route to Mail Stop P4 5000

    Form 1042, Annual Withholding Tax Return for U.S. Sourced Income of Foreign Persons YES Edit received date on the detached form and route for processing:
    CSPC and KCSPC - Route to OSPC.
    OSPC - Route to Receipt and Control.
    Form 1065XAmended Return or Administrative Adjustment Request (AAR) NO See IRM 3.11.15.5.5 procedures for Amended Returns and IRM 3.11.15.7 for Signature.
    Form 1096, Annual Summary of U.S. Information Returns. YES Route to Receipt and Control.
    Form 1099, (All series)Information Return of Income and Payments (Copy A only) YES Route to Receipt and Control.
    Form 1125-A, Cost of Goods Sold NO See IRM 3.11.15.32 and IRM 3.11.15.65.
    Form 1128, Application to Adopt, Change or Retain a Tax Year NO See IRM 3.11.15.8.5 Change in Accounting Period.
    Form 2848, Power of Attorney and Declaration of Representative (POA) YES Ogden - Route to Mail Stop 6737
    Cincinnati and Kansas City - Route to;
    Internal Revenue Service
    PO Box 268, Stop 8423
    Memphis, TN 38101–0268
    For Private Delivery Carriers:
    Internal Revenue Service
    5333 Getwell Road Stop 8423
    Memphis, TN 38118

    Edit as follows:
    1. Edit partnership name and EIN on Form 2848 if missing.

    2. Edit received date on Form 2848.

    3. Route Form 2848 to CAF (Centralized Authorization File) function.

    4. Edit action trail on tax return.

    Form 3115, Application for Change in Accounting Method NO Edit Audit Code 6 in the left margin next to Line 9 in 1-6 format. See IRM 3.11.15.19.1, Audit Codes.
    Form 3468, Computation of Investment Credit NO Edit Historic Structure Code "3" in the left margin next to Line 9 of Form 1065 if tax period ending is 8312 or later in 6-3 format and the conditions in IRM 3.11.15.19.5, Historic Structure Code, are met.
    Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts YES/NO Yes - If Form 3520 has an original signature.
    1. Forward to OSPC via Form 4227

    2. Issue Letter 86C if transferring from a service center other than Ogden.

    3. Notate letter sent on Form 1065.

    No- Leave Form 3520 attached if the Form 3520 does not have an original signature.
    • .

    Form 3520-A, Annual Return of Foreign Trust With U.S. Beneficiaries YES/No Yes - If Form 3520-A has an original signature.
    1. Forward to OSPC via Form 4227

    2. Issue Letter 86C if transferring from a service center other than Ogden.

    3. Notate letter sent on Form 1065.

    No - Leave Form 3520-A attached if the Form 3520-A does not have an original signature.
    Form 4255, Recapture of Investment Credit NO Edit Computer Condition Code "X" on partnership returns that have this form attached to repay any unused Qualifying Therapeutic Discovery Project (QTDP). These returns will have a notation "QTDP" and money amount in the margin near Line 22. See IRM 3.11.15.15.13, CCC X - Refund/Settlement Freeze and IRM 3.11.15.22.16, Qualifying Therapeutic Discovery Project (QTDP).
    Form 4571, Explanation for Filing Return Late or Paying Tax Late NO This form is obsolete as of 1/20/2004.
    No action
    Form 4797, Sale of Business Property NO See IRM 3.11.15.21.6 and IRM 3.11.15.55.10
    Form 4835, Farm Rental Income and Expenses NO Edit the Salary and Wage Code, (entry on Line 20) to the right of Line 9 on Form 1065, and/or the EPMF Code, (entry on Line 21) to the right of Line 18 on Form 1065.
    Form 5471, Information Return of U.S. Persons with Respect to a Foreign Corporation NO Edit Audit Code "2" in the left margin next to Line 9 in "1-2" format. See IRM 3.11.15.23.14 for Schedule B, Question 19 editing procedures.
    Form 5472, Information Return of a Foreign Owned Corporation NO Edit Audit Code "2" in the left margin next to Line 9 in 1-2 format.
    Form 5713, International Boycott Report YES/NO YES - If Original
    1. Edit Audit Code "2" in the left margin next to Line 9 in "1-2" format when both questions in 7(f) are answered "YES" .

    2. Edit Audit Code "7" in the left margin next to Line 9 in "1-7" format if either one or both questions in 7(f) are not answered "YES" .

    3. Detach and forward to OSPC SOI (Statistics of Income) at mailstop (MS) 6112.

      Note:

      If an original signature is present on a photocopy, treat it as an original, if there is no original Form 5713.



    NO - If Copy
    1. Edit Audit Code "2" in the left margin next to Line 9 in "1-2" format when both questions in 7(f) are answered "YES" .

    2. Edit Audit Code "7" in the left margin next to Line 9 in "1-7" format if either one or both questions in 7(f) are not answered "YES" .

    Form 5884-A, Credits for Affected Midwestern Disaster Area Employers NO No Action.
    Form 5884-B, New Hire Retention Credit NO Place in sequence order. See IRM 3.11.15.2, Form 1065 , U.S. Return of Partnership Income (Program #12200) and IRM 3.11.15.33, Form 5884-B, New Hire Retention Credit
    Form 6252, Computation of Installment sale Income NO Edit Installment Sale Indicator Code in the left margin next to Line 9 in 3-1, 3-2, or 3-3 format based on the response to Form 6252, Question 3.
    See IRM 3.11.15.19.3.
    Form 6478, Alcohol and Cellulosic Biofuel Credit NO These instructions apply to 2009 tax year only, including fiscal year filers (200901 through 201011). Edit Action Code "343" if Form 6478 has a significant amount on *Line 5(c) or Line 8.
    *Line 5(c) or Line 7 on 2009 Form 6478.
    Line 7(c) or Line 9 on 2008 Form 6478.
    Not applicable for other prior year revisions.

    Reminder:

    Do not edit AC 343 for Tax Period 201012.

    Form 6765, Credit for Increasing Research Activities NO No Action.
    Form 6781, Gains and Losses From Section 1256 Contracts and Straddles NO Edit Computer Condition Code "I" (as in "Idaho" ).

    Note:

    Edit an upper case letter "I" , with a line drawn at the top and at the bottom, to facilitate ISRP transcription and to distinguish this letter from the number "1" (one).

    Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns YES/NO YES - , If Form 7004 is for a tax return other than the one being edited, edit Received Date and route to Receipt and Control.

    NO - ,If Form 7004 is for the tax return being edited no action.
    Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR) NO Edit Audit Code "1" in the left margin next to Line 9 in "1-1" format.
    Form 8271, Investor Reporting of Tax Shelter Registration Number NO Edit Computer Condition Code "T" .

    Note:

    Valid for Tax Periods 200711 and prior only.

    Form 8275, Disclosure Statement NO Edit Audit Code "1" in the left margin next to Line 9 in "1-1" format.
    Form 8275-R, Regulation Disclosure Statement NO Edit Audit Code "1" in the left margin next to Line 9 in "1-1" format.
    Form 8283, Non-Cash Charitable Contributions NO Edit Audit Code 5 in the left margin next to Line 9 in "1-5" format if the conditions in IRM 3.11.15.19.1 are met.
    Form 8308, Report on the Sale or Exchange of Certain Partnership Interest NO No Action.
    Form 8453-B, U.S. Electing Large Partnership Declaration for an IRS e-file Return YES (If signature present) Transship form to OSPC Electronic Filing Unit:
    ARKA Monterey Park Bldg.
    OSPC
    ELF Processing Support Section
    OSC M/S 6052
    1973 North Rulon White Blvd.
    Ogden, UT 84404-5402
    Form 8453-PE, U.S. Partnership Declaration for an IRS e-file Return YES (If signature present) Transship form to OSPC Electronic Filing Unit.
    ARKA Monterey Park Bldg.
    OSPC
    ELF Processing Support Section
    OSC M/S 6052
    1973 North Rulon White Blvd.
    Ogden, UT 84404-5402
    Form 8586, Low-Income Housing Credit NO See IRM 3.11.15.24.11 (Line 15a, Schedule K) and IRM 3.11.15.24.12 (Line 15b, Schedule K)
    Form 8594, Asset Acquisition Statement NO Edit Audit Code "5" in the left margin next to Line 9 in "1-5" format if Box 3 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . See IRM 3.11.15.19.1(8)
    Form 8609, Low-Income Housing Credit Allocation Certification NO See IRM 3.11.15.24.11 and IRM 3.11.15.24.12.
    Form 8609-A,Annual Statement for Low-Income Housing Credit NO See IRM 3.11.15.24.11 and IRM 3.11.15.24.12.
    Form 8611, Recapture of Low-Income Housing Credit NO No Action.
    Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund NO
    1. Edit Audit Code "2" in the left margin next to Line 9 in "1-2" format if Part V, Lines 15a - 16f has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    2. Edit Audit Code "7" in the left margin next to Line 9 in "1-7" format if Part V, Lines 15a -16f has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    Note:

    If Form 8621 is a prior year revision (2011 or prior) check Part IV, Lines 10a - 11f for entries.

    Form 8693, Low-Income Housing Credit Disposition Bond NO No Action.
    Form 8697, Interest Computation Under the Look-Back Method for Completing Long-Term Contracts YES/NO YES - IF:
    1. Form 1065 has a $ amount (interest due) written by the taxpayer in the bottom margin (i.e., from Form 8697 ).

      • Edit CCC"X"

      • Photocopy page 1 of Form 1065

      • Detach Form 8697 and route with photocopy to Accounts Management
        NMF unit (CAMC)
        Mail Stop 6111G

    2. Line 9 (Form 8697) indicates a "Refund" :

      • Edit Tax Period and EIN on Form 8697.

      • Detach and route to Accounts Management (AM).
        NMF unit (CAMC)
        Mail Stop 6111G



    NO - If Line 9 (Form 8697) DOES NOT indicate a "Refund" , no action.
    Form 8716, Election to Have a Tax Year Other than a Required Tax Year
    (original Form 8716)
    NO See IRM 3.11.15.8.5Change in Accounting Period.
    Form 8752, Required Payment of Refund Under Section 7519 YES
    1. Make sure the Partnership Name, Received Date, Tax Period and EIN are included on the form.

    2. If any of these items are missing, edit the information from the Form 1065 return to the appropriate areas of the Form 8752.

    3. Route to Receipt and Control Unit.

    Form 8804, Annual Return for Partnership Withholding Tax (Section 1446) YES
    1. Edit Audit Code "2" in the left margin next to Line 9 in "1-2" format.

    2. Forward to OSPC.

    Caution:

    Do not detach and forward if the form is unsigned or clearly identified as a "copy" .

    Form 8805, Foreign Partners Information Statement of Section 1446 Withholding Tax YES, (if Form 8804 attached). Otherwise, NO
    1. Edit Audit Code "2" in the left margin next to Line 9 in "1-2" format.

    2. Forward to OSPC.

    Caution:

    Do not detach and forward if the form is clearly identified as a "copy" .

    Form 8813, Partnership Withholding Tax Payment Voucher (Section 1446) NO Edit Audit Code "2" in the left margin next to Line 9 in "1-2" format.
    Form 8821, Tax Information Authority (TIA) YES Ogden - Route to Mail Stop 6737
    Cincinnati and Kansas City - Route to;
    Internal Revenue Service
    PO Box 268, Stop 8423
    Memphis, TN 38101–0268
    For Private Delivery Carriers:
    Internal Revenue Service
    5333 Getwell Road Stop 8423
    Memphis, TN 38118

    Edit as follows:
    1. Edit partnership name and EIN on Form 8821.

    2. Edit Received Date on Form 8821.

    3. Route Form 8821 to CAF function.

    4. Edit action trail on tax return.

    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business: YES/NO YES -Route Form 8822 or Form 8822-B to Entity if any of the following applies:
    • Mailing address information is different,

    • Location address is listed on Form 8822 or Form 8822-B, Line 7,

    • An entry is listed on Form 8822-B, Lines 8 or 9,



    NO - No action is needed if all of the following applies:
    • Mailing address information is the same,

    • No location address is listed on Form 8822 or Form 8822-B, Line 7,

    • No entry on Form 8822-B, Lines 8 or 9,

    Form 8824, Like Kind Exchanges NO Edit Computer Condition Code "1" . See IRM 3.11.15.15.15 (CCC "1" ). See IRM 3.11.15.24.8.
    Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation NO See IRM 3.11.15.24.1, Line 2, Schedule K and IRM 3.11.15.55.5.
    Form 8832, Entity Classification Election NO Edit Audit Code "2" in the left margin next to Line 9 in "1-2" format if box 6(d), (e) or (f) is checked.
    Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) NO
    1. Edit Computer Condition Code "L" See IRM 3.11.15.15.7

    2. Edit Audit Code 2 in the left margin next to Line 9 in "1-2" format.

    Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities NO Edit Audit Code "2" in the left margin next to Line 9 in "1-2" format.
    Form 8865, Information Return of U.S. Persons With Respect to Certain Foreign Partnerships NO Edit Audit Code "2" in the left margin next to Line 9 in "1-2" format. See IRM 3.11.15.19.1, Audit Codes.
    For other editing instructions, See IRM 3.11.15.23.3, Foreign or Domestic Corporate Ownership - (Question 3a) and IRM 3.11.15.23.13, Number of Forms 8865 Attached - (Question 17).
    Form 8866, Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method YES/NO YES - IF:
    1. Form 1065 has a $ amount (interest due) written by the taxpayer in the bottom margin (i.e., from Form 8866).

      • Edit CCC "X"

      • Photocopy page 1 of Form 1065

      • Detach Form 8866 and route with photocopy to Accounts Management
        NMF unit (CAMC)
        Mail Stop 6111G

    2. Line 9 (Form 8866) indicates a "Refund" :

      • Edit Tax Period and EIN on Form 8866.

      • Detach and route to Accounts Management (AM).
        NMF unit (CAMC)
        Mail Stop 6111G



    NO - If Line 9 of the Form 8866DOES NOT indicate a "Refund" , no action.
    Form 8873, Extraterritorial Income Exclusion NO No Action.
    Form 8879-B, IRS e-file Signature Authorization for Form 1065-B NO No Action.
    Form 8879-PE, IRS e-file Signature Authorization for Form 1065 NO No Action.
    Form 8883, Asset Allocation Statement Under Section 338 NO Edit Audit Code "5" in the left margin next to Line 9 in "1-5" format if Box 5a, Stock Price≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (See IRM 3.11.15.19.1).

    Edit a CCC "S" when Form 8883 is attached to Form 1065 (See IRM 3.11.15.15.10).
    Form 8886, Reportable Transaction Disclosure Statement NO Edit Audit Code "1" in the left margin next to Line 9 in "1-1" format.

    Edit a CCC "T" for Tax Period 201301 and subsequent.
    Form 8893, Election of Partnership Level Tax Treatment NO See IRM 3.11.15.23.7
    Form 8894, Request to Revoke Partnership Level Tax Treatment Election YES Forward to:
    OIRSC
    TEFRA M/S 4510
    Form 8902, Alternative Tax on Qualifying Shipping Activities NO No Action.
    Form 8913, Credit for Federal Telephone Excise Tax Paid NO
    1. Edit Action Code "420" on original Form 1065/1065-B.

    2. Place in sequence order.


    (See IRM 3.11.15.2 and IRM 3.11.15.38)
    Form 8938, Statement of Specified Foreign Financial Assets NO Edit CCC 2 if attached. See IRM 3.11.15.23.15.
    Form 8941, Credit for Small Employer Health Insurance Premiums NO
    1. Place in sequence order. See IRM 3.11.15.2 and IRM 3.11.15.38.

    2. For further Instructions, See IRM 3.11.15.34Form 8941, Credit for Small Employer Health Insurance Premiums

    Form 9100, Notice of Late Election Original
    YES
    Copy
    No
    Determine which IRC section is cited on Form 9100, Line 1a and route as follows:
    • Section 301.7701-3, Classification of certain BMF Entities.
      Route to BMF Entity
      Cincinnati, Mail Stop 343
      Kansas City, Mail Stop C-1 6055
      Ogden, Mail Stop 6273

    • Section 42 - Form 8609, Low income Housing Credit Allocation and Certification
      Route to:
      Department of the Treasury
      Internal Revenue Service Center
      Low Income Housing Program
      Philadelphia, PA 19255-0549

    • Section 616(b) - Pursuant to 1.616-2(c)(2), Election to defer.
      Route to:

    Form 9465,Installment Agreement Request YES
    • Ogden - Route to Collections.

    • Cincinnati - Route to Receipt and Control (R&C).

    • Kansas City - Route to Mail Stop P4 5000

    Form 14039-B, Business Identity Theft Affidavit No If the envelope is addressed to a specific function or a specific function is indicated by an IRS CP notice or IRS letter, place the Form 14039-B on top and route Form 14039-B and the return to the specific function.

    If either center, Cincinnati or Ogden, receives a Form SS-4, Application for Employer Identification Number and Form 14039-B route the returns to BMF Entity:
    201 W. Rivercenter Blvd.
    Mail Stop 343
    Covington, KY 41011.

    For the following returns:
    • Loose Form 14039-B.

    • No correspondence attached (e.g., no IRS CP notice or IRS letter).

    • The envelope is not addressed to a specific function.


    Place the Form 14039-B on top of the return and route to the local Image Control Team (ICT).
    Cincinnati - Mail Stop 318G.
    Ogden - Mail Stop 6552.
    Kansas City - Mail Stop C1 6525
    Form 14157, Complaint: Tax Return Preparer Yes Route to:
    Attn: Return Preparer Office
    401 W. Peachtree Street NW
    Mail Stop 421-D
    Atlanta, Georgia 30308
    Schedule D, Capital Gains and Losses NO
    1. Place in sequence order, See IRM 3.11.15.2.1, General Editing Guidelines

    2. For further instructions, See IRM 3.11.15.24, Schedule K, Form 1065, IRM 3.11.15.24.8, Line 9a, Schedule K and IRM 3.11.15.31, Schedule D (Form 1065) - Capital Gains and Losses.

    Schedule E, Supplemental Income and Loss NO Schedule E should not be filed with Form 1065. If attached, See IRM 3.11.15.24.1, Line 2, Schedule K.
    Schedule F (Form 1040), Profit or Loss From Farming NO See IRM 3.11.15.29, Schedule F - Profit or Loss From Farming.
    Schedule M-3, Net Income (Loss) Reconciliation for Certain Partnerships NO All returns with a Schedule M-3 attached must be transshipped to Ogden for processing.
    1. Edit Computer Condition Code B. (IRM 3.11.15.15.2)

    2. Edit Audit Code "8" in the left margin next to Line 9 "1-8" format IRM 3.11.15.19.1.

Special Conditions

  1. The following instructions reference special procedures.

♦Statute Returns♦

  1. Any return with a received date that is two years and nine months or more after the Return Due Date is a potential statute control return.

  2. Statute returns must be routed to the Statute Control Unit daily or more often if needed.

  3. Do not route to Statute Control Unit for clearance, edit CCC "W" , and continue processing if any of the following conditions are present:

    • Compliance IRC 6020(b) returns.

    • Secured by Examination/Collections, Secured by TE/GE, Secured by TE/GE EP Exam.

    • Returns with "TC 59X" or "ICS" notated on the face of the return.

    • Returns that are substitute returns prepared by Examination (SFR) in top margin of the return.

    • Returns with a stamp indicating a previous clearance by Statute Control within the last ninety days.

  4. If a Form 12412, Operations Assistance Request (OAR) is received from TAS and the return is a potential statute control return but is not stamped "Cleared by Statute" , give the return to your lead. The lead will contact the TAS employee listed on the OAR for rejection of the return and send it back to TAS for clearance by the Statute Unit.

    Note:

    If the return is within 90 days of the statute expiration date advise the TAS employee of such and route the return directly to statute for clearance.

  5. Statute returns are unprocessable until they are cleared by Statute Control.

    If... Then...
    The return is numbered,
    1. Edit Action Code 310 on the return.

    2. Leave the return in the batch and continue processing.

    The return is unnumbered,
    1. Do not continue processing.

    2. Pull the return from the batch.

    3. Attach Form 4227 and route to Statute Control Unit. (See Figure 3.11.15-3).

  6. Edit CCC "W" if the return has been cleared by Statute Control Unit. Statutes will stamp or indicate clearance on the front of the return. (Figure 3.11.15-4).

  7. Statute may stamp a return as No Statute Issue, Statute N/A, or similar statement indicating there is no statute issue. Follow the chart below to determine if a CCC W is needed:

    If... And... Then...
    The return received date is two years and nine months or more after the Return Due Date, The return is stamped, “No Statute issue”, "Statute N/A" , or similar statement indicating there is no statute issue, Edit a CCC W
    The return received date is less than two years and nine months from the Return Due Date, The return is stamped, “No Statute issue”, "Statute N/A" , or similar statement indicating there is no statute issue, Do not edit a CCC W
  8. IRC 6229 established a three year statute of limitation on partnerships covered under the Tax Equity Fiscal Responsibility Act (TEFRA).

    Figure 3.11.15-3

    This is an Image: 33495003.gif
     

    Please click here for the text description of the image.

    Figure 3.11.15-4

    This is an Image: 33495004.gif
     

    Please click here for the text description of the image.

Reserved

  1. This Subsection is reserved for future use.

♦Compliance Secured/Prepared Returns♦

  1. Compliance functions (Collections and Examination) secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

    1. Prepared tax returns are notated with IRC "6020(b)" or "SFR" (Substitute for return).

    2. Secured tax returns are notated with "TC 59X" or "ICS" (Integrated Collection System) or notated "Process as Original" with an attached Form 13133, Expedite Processing Cycle. The "Delinquent Return" box on Form 13133 should be checked.

      Note:

      If "RD" is notated on the front of the return and not circled, remove from the batch and route to Collections.

♦IRC 6020(b) - Prepared by Collection♦
  1. When the taxpayer fails to file a required return, IRC 6020(b), is the authority for IRS to prepare the return.

  2. These returns are identified by the notation: "PREPARED AND SIGNED UNDER THE AUTHORITY OF IRC 6020(b) OF THE INTERNAL REVENUE CODE" , which is located in the center bottom of Page 1 of the return.

    1. Returns must have an IRS Received Date. If the IRS Received Date is missing, follow the normal procedures for editing the Received Date. (See IRM 3.11.15.6, Received Date)

    2. Returns must be signed by Compliance Function representative. If not signed, route to Compliance using Form 4227.

      Note:

      Starting July 1, 2013, the Revenue Officers (RO) electronic or typed signature will be accepted as a valid signature on the return.

    3. Edit CCC "4" . See IRM 3.11.15.15.18 and Figure 3.11.15-5.

      Note:

      CCC "R" cannot be used with CCC "4" .

    4. Edit CCC "D" if the Compliance Function representative notates "DO NOT ASSESS FAILURE TO PAY PENALTY" and the return due date (without regard to extensions) is July 30, 1996 or prior.

      Note:

      Do not edit CCC "D" if the return due date is after July 30, 1996 (without regard to extensions) even if the Compliance Function representative notates "DO NOT ASSESS FAILURE TO PAY PENALTY" .

    5. Do Not correspond with the taxpayer for unprocessable conditions. If the return is unprocessable, edit CCC "3" and continue processing.

    6. Edit CCC "W" if the IRS Received Date is more than two years nine months after the Return Due Date. Do Not send the return to Statute Control. (See IRM 3.11.15.15.12 )

    7. Number of partners, Line I, must be 2 through 999,999.

      If... Then...
      Number of partners is blank, IRM 3.11.15.16
      Number of partners is greater than 100, Edit CCC "6" .

    Figure 3.11.15-5

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♦Collection Secured♦
  1. These returns are identified by the notations: "TC 59X" or "ICS" . See Figure 3.11.15-6

    1. Do Not edit CCC "G" on these returns.

    2. Use approved Correspondence Action Sheet to correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. Edit CCC "W" if the IRS Received Date is more than two years nine months after the Return Due Date. Do Not send the return to Statute Control. (See IRM 3.11.15.5.1)

    4. Number of partners, Line I, must be 2 through 999,999.

      If... Then...
      Number of partners is blank, IRM 3.11.15.16
      Number of partners is greater than 100, Edit CCC "6" .

    Figure 3.11.15-6

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♦Examination Prepared ♦
  1. These returns are identified by the notation: "SFR" or "SUBSTITUTE RETURN" on Page 1.

    1. Return must have an IRS Received Date. If no IRS Received Date is present, follow the normal procedures for editing the IRS Received Date.

    2. Do Not correspond with the taxpayer for unprocessable conditions. If the return is unprocessable, edit CCC "3" and continue processing.

    3. If Form 13133 is attached, edit the Computer Condition Code(s) that are checked on the form.

      Note:

      Do not enter CCC "D" unless the return due date (without regard to extensions) is July 30, 1996 or prior, even if the CCC “D” box is checked on Form 13133.

      Note:

      CCC "R" cannot be used with a CCC "4" .

    4. Edit CCC "W" if the IRS Received Date is more than two years nine months after the Return Due Date. Do Not send the return to Statute Control. (IRM 3.11.15.5.1)

    5. Number of partners, Line I, must be 2 through 999,999.

      If... Then...
      Number of partners is blank, Edit "2" as the number of partners.
      Number of partners is greater than 100, Edit CCC "6" . (IRM 3.11.15.15.20)
♦Examination Secured♦
  1. These returns are identified by the notation "Process as Original" on Page 1 of the return and a Form 13133, Expedite Processing Cycle, attached with the "Delinquent Return" box checked.

    1. Do Not edit CCC "G" on these returns.

    2. Use approved Correspondence Action Sheet to correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. Edit the Computer Condition Code(s) that are checked on Form 13133.

    4. Edit CCC "W" if the IRS Received Date is more than two years nine months after the Return Due Date. Do Not send to Statute Control. (IRM 3.11.15.5.1)

      Reminder:

      If Form 13133 (or something similar) indicates a penalty or penalties should be suppressed, edit the appropriate Computer Condition Code(s). Please refer to IRM 3.11.15.15 for additional information.

    5. Number of partners, Line I, must be 2 through 999,999.

    If... Then...
    Number of partners is blank, IRM 3.11.15.16
    Number of partners is greater than 100, Edit CCC "6" . (See IRM 3.11.15.15.20)

♦Re-Entry Document Procedures♦

  1. A return posted to the incorrect account or module or attempting to post must be reprocessed to post to the proper account or module.

  2. Some re-entry returns may have originally been filed electronically (E-File). These returns may be identified by the presence of Mod E-file printouts in lieu of an actual return.

    • Do not correspond for missing signatures on these documents.

    • Edit a CCC "6" if more than 100 partners.

  3. Each re-entry return must have a Form 3893, Re-Entry Document Control or Form 13596, Reprocessing Returns, attached.

    • Form 3893 is used to reinput documents that have not posted to an account or module

    • Form 13596 is used to reprocess documents that had previously posted to an incorrect account or module

  4. Always leave the Form 3893 or Form 13596 on the front of the return. It must remain as a permanent part of the document.

  5. Examine Form 3893 or Form 13596 to determine the action needed to make the return processable.

    Caution:

    If the IRS Received Date is two years and nine months or more after the return due date, refer to statute procedures before re-entering or reprocessing the return. See IRM 3.11.15.5.1.

♦Form 3893 - Re-Entry Document Control♦
  1. Form 3893, Re-Entry Document Control, is used to reinput a return that has not posted to an account or module.

  2. If more than one return is in the batch and only the top Form 3893 has an entry in Box 1 (Alpha/Numeric block control no.), edit all returns using current processing instructions and keep all returns clipped together.

  3. Circle the CCC "G" if present.

  4. Do not edit CCC "G" on amended returns.

  5. Do not send Letter 1382C if a request for reasonable cause is attached.

  6. If the return was not edited according to current processing instructions, circle any Action Codes, Computer Condition Codes and any other edit marks that are no longer applicable. Re-edit according to current processing instructions.

  7. If the return was edited according to current processing instructions, ensure the information from Form 3893 is edited on the return.

    Form 3893 Action Taken
    Box 14 (Remarks) Ensure that the information is edited to the return.
    Box 15 (Process as)
    1. Circle any green rocker and edit marks that indicate a receipt of remittance.

    2. Do not change any tax due amounts.

  8. Examine returns that have any color other than red editing in the tax data section to determine if the corrections are the result of improper perfection or taxpayer error.

    If... Then...
    Improper perfection, Edit the same correction in red/green (per local procedure) to the appropriate area.
    Taxpayer error, Leave the entries as shown on the document.
  9. An IRS Received date must be present on all reinput returns:

    If... Then...
    IRS Received Date is not present, Edit an IRS Received Date to the middle of the return.
    Multiple IRS Received Dates are present, Circle all but the earliest date.
  10. When additional information is still needed to make the return processable, prepare approved Correspondence Action Sheet or Form 4227 for the appropriate action (e.g., correspondence, research, etc.).

    Reminder:

    Do Not correspond for missing Schedules K-1. (See IRM 3.11.15.16).

  11. When perfection is not possible edit Action Code 640 on the return and attach Form 4227 noting "PERFECTION NOT POSSIBLE" and leave in the batch.

♦Form 13596 - Reprocessing Returns♦
  1. Form 13596, Reprocessing Returns, is used to reprocess a return to the correct account or module that had previously posted to the incorrect account or module.

  2. Circle CCC "G" if present.

  3. Do not edit CCC "G" on amended returns.

  4. Do not send Letter 1382C if a request for reasonable cause is attached.

  5. If the return was not edited according to current processing instruction, circle any Action Codes, Computer Condition Codes and any other edit marks that are no longer applicable. Re-edit according to current processing instructions.

  6. If the return was edited according to current processing instruction ensure that the information from Form 13596 is edited on the return.

    Form 13596 Action Taken
    TIN correction, Edit correct TIN on return.
    Tax period correction, Edit correct tax period ending on return.
    Reasonable cause, Edit appropriate computer condition code:
    1. Edit CCC "R" if the "FTF" box is checked.

    2. Edit CCC "D" if the "FTP" box is checked.

  7. Examine returns that have any color other than red editing in the tax data section to determine if the corrections are the result of improper perfection or taxpayer error.

    If... Then...
    Improper perfection, Edit the same correction in red/green (per local procedure) to the appropriate area.
    Taxpayer error, Leave the entries as shown on the document.
  8. An IRS Received Date must be present on all reprocessed returns:

    If... Then...
    IRS Received Date is not present, Edit an IRS Received Date to the middle of the return.
    Multiple Received Dates are present, Circle all but the earliest date received by the IRS.
  9. Circle any green rocker and edit marks that may indicate a receipt of remittance.

  10. When additional information is still needed to make the return processable prepare an approved Correspondence Action Sheet or Form 4227 for the appropriate action (e.g., correspondence, research, etc.).

    Reminder:

    Do Not correspond for missing Schedules K-1. (See IRM 3.11.15.16).

♦Amended Returns♦

  1. A return is considered Amended based on any of the following:

    • The Amended Box is checked.

    • On MeF returns the "Superseded Return" or the" Amended Return" box is checked. The "Superseded Return" and the "Amended Return" boxes will only be on MeF returns that have been printed. They will be located on Line G.

    • Words such as “Supplemental”, “Corrected”, "Superseded" or “Additional” are present.

    • Any indication from the taxpayer that a previous return was filed.

    • Form 1065X is attached for the Tax Period of the Form 1065 filed.

      Note:

      Words such as ‘Copy” or “Duplicate” are not sufficient indicators and must be accompanied by a statement from the taxpayer that a previous return was filed.

  2. Examine the return for attachments:

    • Do not separate any related attachments submitted to explain the reason for the Amended return (information may be useful to Accounts Management)

    • Detach any unrelated documents, route them to the appropriate function using Form 4227, and edit the Action Trail on the return

  3. There is an indication the return is amended and:

    If... Then...
    "59X" or "ICS" was entered on the return by Compliance Services, Do not edit CCC "G" .
    Process the return as an original.
    The return is stamped "Delinquent Original Cleared for Processing " by Statute, Do not edit CCC "G" .
    Process the return as an original.
    Form 3893 or Form 13596 is attached, Do not edit CCC "G" .
    See Form 3893 - Re-Entry Document Control, IRM 3.11.15.5.4.1, or
    Form 13596 - Reprocessing Returns, IRM 3.11.15.5.4.2
    None of the above is present, Edit CCC "G" .

    Note:

    CCC "S", CCC "T", CCC "W" , CCC "3" , and/or Error Resolution System (ERS) Action Codes may be used with CCC "G" .

    Reminder:

    Do Not correspond for missing Schedules K-1. (IRM 3.11.15.16).

  4. The following data must be edited on all amended returns:

    1. Name control (See IRM 3.11.15.9.3)

    2. EIN (See IRM 3.11.15.9.2)

    3. Tax period (See IRM 3.11.15.8.1)

    4. CCC "G"

    5. IRS Received Date (See IRM 3.11.15.6, Received Date)

    6. Signature (See IRM 3.11.15.7)

  5. Detach Schedules K-1 for current year (TY2017), two preceding years (TY2016 and TY2015) and future Schedules K-1. Process according to IRM 3.0.101.

Short Record Returns - General Instructions (for All Short Records)

  1. This section provides instructions for editing Short Record returns. Short Record returns include:

    • IRC 761(a) Returns

    • Common Trust Returns

    • Nominee Returns

    • Inactive Returns

    Reminder:

    Always edit "SR" on the left top margin above the form number on a Short Record return.

  2. Short record returns must be edited correctly to prevent erroneous assessment of any penalties.

  3. Process as a Short Record unless any of the following conditions apply:

    1. An audit code (other than "1" for 761(a) returns) is present (See IRM 3.11.15.19.1 ).

    2. A nonrecourse loan code is edited (See IRM 3.11.15.19.4).

    3. The return is a "Publicly Traded Partnership" . (See IRM 3.11.15.2 , IRM 3.11.15.22.15, and/or IRM 3.11.15.15.13)

      Reminder:

      On Short Record Returns, do not correspond for missing information or attachments (unless directed by Examination on 761(a) returns), and do not edit CCC "A" .

IRC 761(a) Returns
  1. IRC 761(a) permits certain arrangements treated as partnership to elect to be excluded from the partnership rules. Form 1065 must be filed only for the year of the election and a statement of the election should be attached to the return. if the return shows any tax data relating to an entity level computation of income, it cannot be treated as a Section 761(a) election.

  2. Form 1065 can be identified as a potential Section 761(a) election if the return contains all of the following:

    • Name or other identification, address, EIN, but no tax data for the organization

    • Names, addresses, and identification numbers of all the organization's members

    • Statement that the organization qualifies, and the members elect, to be excluded from Subchapter K

  3. Or, the partnership references any of the following:

    • IRC 761(a) or Treas. Reg. 1.761-2 annotated

    • Rev. Proc. 2002-68 (for tax years beginning before 01/01/2004)

    • Rev. Proc. 2003-84 (for tax years beginning after 01/01/2004)

    • Publication 541 (Partnerships)

    • Publication 550 (Investment Income and Expenses)

    • The joint purchase, retention, sale, or exchange of investment property

    • The joint production, extraction, or use of property

    • Exclusion filed under Subchapter K

    • Lottery Club

  4. When a return is identified as a potential IRC 761(a) election, suspend the editing of the return and hold for periodic review by Examination Classification. The frequency of the review will be determined by campus management.

  5. Examination will determine if the election is accepted, rejected, or selected for examination. After Examination has made its determination, process each group of returns as follows:

    If... Then...
    Election is "ACCEPTED" by Examination,
    1. Edit CCC "F."

    2. Edit as Short Record (SR).


    (See IRM 3.11.15.5.6)
    Return is "SELECTED FOR EXAMINATION" ,
    1. Edit Audit Code "1" .

    2. Continue editing the return. IRM 3.11.15.5.6 and IRM 3.11.15.19.1 for information regarding Short Record returns and Audit Codes, respectively.

    Election is "REJECTED" by Examination, Edit as Form 1065 long record.

    Note:

    For purposes of these instructions, long records must include all other information contained on the return (i.e., income, deductions, all schedules and attachments).

    Correspondence is required, Issue Letter 1355C requesting information as directed by the Examination representative.

    Note:

    Phone inquiries regarding technical questions should be directed to the Examination representative.

  6. Process "Accepted" and "Selected" Section 761(a) elections as a Short Record return:

  7. Edit when required:

    • Always edit "SR" in the top margin above the form number "1065"

    • Always edit "761(a)" in the upper left hand corner of Form 1065

    • Always edit Computer Condition Code "8" . (IRM 3.11.15.15.21)

    • Name Control (IRM 3.11.15.9.3)

    • EIN (IRM 3.11.15.9.2)

    • Tax Period Ending (IRM 3.11.15.8.1)

    • Tax Period Beginning if CCC "F" is edited - (See IRM 3.11.15.8.2)

    • Number of partners (IRM 3.11.15.16)

      Note:

      Edit number of partners as "2" if missing.

    • Received date See IRM 3.11.15.6, Received date

    • Address change, if present IRM 3.11.15.9.5

  8. For elections "accepted" by Examination, edit Computer Condition Code "F" on the return. See Figure 3.11.15-7 below.

  9. For elections "selected" by Examination, edit Audit Code "1" on the return.

    Figure 3.11.15-7

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Common Trusts
  1. Identify IRC 6032, Common Trust Fund Filers, by any of the following entries:

    • Box A, Principal Business Activity - Partnership entered: "COMMON TRUST FUND" or "Common Trust"

    • Box C, Business Code Number - Partnership entered "525920" (North American Industry Classification System (NAICS) Code

    • Partnership notates on Form 1065"IRC 6032 COMMON TRUST FUND" or similar notation

  2. Process as a Short Record return.

    Note:

    Do not edit as a Short Record if return requires an Audit Code (Other than 1 for 761a) and/or Non-recourse Code or is a publicly traded partnership.

  3. Edit when required:

    • Always edit "SR" in the top margin above the form number "1065" (See Figure 3.11.15-8)

    • Name Control (IRM 3.11.15.9.3)

    • EIN (IRM 3.11.15.9.2)

    • Tax Period Ending, (IRM 3.11.15.8)

    • Tax Period Beginning. (IRM 3.11.15.8.2)

    • Received date (IRM 3.11.15.6)

    • Number of Partners - If blank or "1" , edit a "2"

    • Computer Condition Codes (CCC)

      Reminder:

      Always edit CCC "5 " IRM 3.11.15.15.19.
      ≡ ≡ ≡ ≡ "≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • Address change if present

  4. If the partnership submits a Common Trust return on a non-standard form (Common Trust Fund Return of Income, letter with Investment Trust Company letterhead, etc.), prepare a dummy Form 1065 with the following information:

    1. Name and address (IRM 3.11.15.9)

      Note:

      If the name and/or address cannot be determined, perform IDRS research using the EIN provided on the return/letter.

    2. EIN (IRM 3.11.15.9.2)

    3. Tax Period (IRM 3.11.15.8)

    4. Received Date (IRM 3.11.15.6)

    5. Computer Condition Codes (CCC)

    6. Number of partners (IRM 3.11.15.16)

    Figure 3.11.15-8

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Nominee Returns
  1. Partnerships formed solely for the purpose of acting as a nominee or agent are not required to file a partnership return, but may file Form 1065 to establish that they are not required to file. (They are required to file Form 1099 showing the actual owner of the income.)

  2. Nominee returns usually contain only partnership entity information with a statement notating the partnership is a nominee and is not required to file.

  3. Process as a Final, Short Record return;

  4. Edit the following when required:

    • Always edit "SR" in the top margin above the form number "1065"

    • Received Date - Always edit a timely received date (the original return due date) regardless of when the return was received

    • Name Control - (See IRM 3.11.15.9.3)

    • EIN - (See IRM 3.11.15.9.2)

    • Tax Period Ending - (See IRM 3.11.15.8)

    • Always edit Tax Period Beginning if present - (See IRM 3.11.15.8.2)

    • Number of Partners - If blank or "1" , edit a "2"

    • Computer Condition Codes

      Reminder:

      Always edit Computer Condition Code "F" .
      Edit CCC "6" if return has more than 100 partners.

Inactive Returns
  1. Identify an Inactive Return if there are no dollar amounts on any transcription lines on Form 1065, pages 1–5 (except Box "F" " Total Assets " ) and no dollar entries on transcription lines on any of the following forms:

    • Schedule F Form 1040,Profit or Loss From Farming.

    • Form 8825,Rental Real Estate Income and Expenses.

    • Schedule D,Capital Gains and Losses.

    • Form 1125-A,Cost of Goods Sold.

    • Form 8913,Credit for Federal Telephone Excise Tax Paid.

    • Form 8941,Credit for Small Employer Health Insurance Premiums.

    • Form 5884-B,New Hire Retention Credit.

    Note:

    A return with an entry in Box "F" (Amount of Assets), page 1 or a "Yes" answer to Question 6, Schedule B is inactive if it meets all the conditions in (1) above.

  2. Process as an Inactive Short Record Return.

    Note:

    Do not edit as a Short Record if form required Audit Code (Other than 1 for 761a) and/or Non-recourse Code or is a publicly traded partnership.

  3. Edit the following when required:

    • Always edit "SR" in the top margin above the form number "1065"

    • Name Control - (IRM 3.11.15.9.3)

    • EIN - (IRM 3.11.15.9.2)

    • Tax Period Ending - (IRM 3.11.15.8)

    • Tax Period Beginning - on Initial, Final, or Short Period Return (IRM 3.11.15.8.2)

    • Received Date - (IRM 3.11.15.6)

    • Number of Partners (Edit number of Schedules K-1 attached or "2" if none or "1" ) (IRM 3.11.15.16)

    • Computer Condition Codes

      Reminder:

      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      Edit CCC "6" if return has more than 100 partners.

    • Address change, if present

♦Received Date♦

  1. The date a document is received in the Campus or IRS Office is the date stamped as the "IRS Received Date" .

  2. An IRS Received Date is required on all Forms 1065.

    If... Then...
    The return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , (See Due Date Chart, Exhibit 3.11.15-3) The return is considered timely.
    The due date falls on a weekend or legal holiday, The return is timely if postmarked by the first business day following the weekend or legal holiday.
    The IRS Received Date stamp ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the legal or extended due date and the postmark or shipment date is on or before the legal or extended due date, Edit the IRS Received Date to agree with the postmark or shipment date.

    Note:

    The postmark or shipment date includes returns delivered by:

    • U.S. Postal Service,

    • Private Delivery Services, e.g. Federal Express Corporation (FedEx) or United Parcel Service (UPS), "designated" by the IRS. See IRM 3.10.72, Receiving, Extracting and Sorting for a list of designated private delivery services, or

    • Returns with a Foreign Postmark.

    Caution:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

     

    Note:

    For certified mail only- If a postmark is not present, look for a "USPS.com Track & Confirm" record that has been attached to the return (should be before the envelope). Use the "Acceptance" date on the record to determine timeliness and follow normal editing procedures. See Exhibit 3.11.15-7.

    If the "USPS.com Track & Confirm" record is not attached, no action is required.

  3. The IRS Received Date may or may not be stamped on the face of the return.

  4. A valid IRS Received Date Stamp may consist of the following:

    • The word "Received"

    • Month (alpha or numeric)

    • Day (for example "1" or "01" )

    • Year - four digits

    • "Area Office" , Campus, "Field Office" , "Taxpayer Assistance Center" (TAC) Site plus the City location or a functional area within one of these sites (e.g., Compliance Services Collection Operations (CSCO), Examination, Image Control Team (ICT). Correspondence Imaging System (CIS), Accounts Management (AM), etc.).

    Exception:

    Not all IRS offices are designated places for filing, and not all IRS employees are authorized to accept a tax return for processing. If a return contains a received date stamp from other than a Taxpayer Assistance Center (TAC), Lockbox, or IRS Campus (Compliance, Accounts Management, or Submission Processing (SP) circle out the invalid received date and edit the correct received date according to instructions below. For example, returns received by the Taxpayer Advocate Service (TAS) or the IRS Office of Chief Counsel are not properly filed and a received date by that office is not the "IRS Received Date" .

  5. If the IRS received date stamp is not present or the date is illegible or invalid, edit the Received Date in MMDDYY format in the middle of page 1 of the return. Edit the IRS Received Date according to the following priority:

    1. The earliest legible Postmark Date (U.S. Postal Service, Foreign Postmark, or Private Delivery Service) on the envelope. Rules for using the U.S. Postal Service (USPS) Postmark, or Foreign Postmark date, or Private Delivery Service are as follows:

      If... Then...
      An envelope is not attached to the return, Use the postmark date stamped on the face of the return.
      A document was returned for insufficient postage, Use the postmark date that coincides with the correct delivery of the return.
      The postmark is missing and the envelope is certified, Look for the "USPS.com Track & Confirm" record that has been attached to the return (should be before the envelope). Use the "Acceptance" date on the record to determine timeliness and follow normal editing procedures. See Exhibit 3.11.15-7.

      If the "USPS.com Track & Confirm" record is not attached, no action is required.
      An envelope has a USPS and private metered postmark, Always use the USPS postmark.
      An envelope has a foreign and private metered postmark, Always use the foreign postmark.
      An envelope has two private metered postmarks, Always use the latest private metered postmark.
      An envelope has only one private metered postmark, Use the private metered postmark.
    2. Service Center Automated Mail Processing System (SCAMPS) digital date.

    3. Revenue Officer's signature date.

    4. Signature Date. (Only if within current year)

    5. Julian Control Date minus 10 days.

    6. Current date minus 10 days.

  6. Edit the IRS Received Date as follows:

    If... Then...
    A timely IRS Received Date is the only received date stamped on the return, No editing is required.
    Two or more dates stamped on the return,
    1. Use the earliest IRS stamped received date.
      See Figure 3.11.15-9.

    2. Circle all other dates (handwritten or stamped) not needed for transcription.

    Note:

    Received dates that have been circled out by another function should be treated as if they are not present.

    A Federal return is addressed to the IRS but delivered to a State agency, Use the postmark date as the IRS Received Date.
    A Federal return is addressed to a State agency, Use the IRS Receive Date stamp as the IRS Received Date.
    The only Received Date on the return is a Taxpayer Advocate Service (TAS) Received Date, Edit the IRS Received Date according to instructions.

    Reminder:

    If an envelope is attached to the return, check the envelope for remittance. If found, hand carry remittance to manager.

  7. If a return has been faxed to another area of the service and then sent to Submission Processing for processing, do not edit the Enterprise Electronic Fax (EEFax) Date as the IRS Received Date. Edit a Received Date according to normal procedures.

    Note:

    The EEFax Date cannot legally be used as an IRS Received Date.

  8. When a Form 1065 is delinquent and the taxpayer explains the return is late due to the rejection of a timely filed electronic return, check the return for a MeF rejection notification.

    Note:

    Taxpayers are instructed to notate in red in the top margin of the return REJECTED ELECTRONIC RETURN to indicate the timely filed return cannot be filed electronically. The notation could be anywhere on the return and is not required, but they should attach a copy of the MeF rejection notification.

  9. If a MeF rejection notification is not attached, perfection of the Received Date is not necessary. If a notification is attached, edit the IRS Received Date in MMDDYY format as follows:

    Note:

    The taxpayer has 10 days to resubmit an electronically filed return after being rejected and 10 days to submit a paper return after the last rejection.

    If... And... Then...
    The postmark date is within 10 days of the date of the rejection,   Edit the IRS Received Date to be the date of the rejection.
    For example, postmark date is 03-22-2018 and first rejection is 03-12-2018. Change Received Date to 031218.
    The postmark date is more than 10 days after the date of the rejection,   Leave the IRS Received Date as is.
    For example, postmark date is 03-23-2018 and first rejection is 03-12-2018. Leave the Received Date as is.

    Exception:

    Change the Received Date to the postmark date if the postmark date makes the return timely.

    There are two rejections, Within 10 days of one another and one is within 10 days of the postmark date, Edit the IRS Received Date to be the date of the first rejection.
    For example, postmark date is 03-22-2018, the second rejection is 03-12-2018. The first rejection is 03-09-2018 Change the Received Date to 030918.
    There are two rejections with the time between the first rejection and the second rejection greater than 10 days, The second rejection is within 10 days of the postmark date, Edit the IRS Received Date to be the date of the second rejection.
    For example, postmark date is 03-22-2018, the second rejection is 03-12-2018. The first rejection is 03-01-2018 Change the Received Date to 031218.
    There are two rejections, Not within 10 days of one another and not within 10 days of the postmark date, Leave the IRS Received Date as is.
    For example, postmark date is 03-23-2018, the second rejection is 03-12-2018. The first rejection is 03-01-2018. Leave the Received Date as is.

    Exception:

    Change the Received Date to the postmark date if the postmark date makes the return timely.

    Figure 3.11.15-9

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♦Signature♦

  1. A signature (general partner's or Limited Liability Company Member's signature) and jurat is required for all returns except the following:

    • Returns prepared under IRC 6020(b). These returns must be signed by a Compliance Function representative (See IRM 3.11.15.5.3.1)

      Note:

      Starting July 1, 2013, the Revenue Officers (RO) electronic or typed signature will be accepted as a valid signature on the return.

    • Returns prepared by Examination, for example "SFR" (Substitute for Return) or "SUBSTITUTE RETURN" (See IRM 3.11.15.5.3.3)

    • Dummy returns prepared by IRS

    • Returns filed under IRC 501(d) (Religious or Apostolic Organization)

    • Correspondence containing a signature and jurat is attached showing that the taxpayer is responding to an IRS letter. See paragraph (5) below.

    • Returns filed as Common Trust (See IRM 3.11.15.5.6.2.)

    • Returns filed under 761(a) (See IRM 3.11.15.5.6.1)

    • Returns filed as Nominee Returns (See IRM 3.11.15.5.6.3)

    • Inactive Short Record Return (See IRM 3.11.15.5.6.4)

    • Form 8879-PE is attached with a valid signature and there is an indication of rejected electronic filing

    • Returns filed by an LP, LLC, LLP, LLLT or UBO claiming only one partner (IRM 3.11.15.16)

    • Returns originally filed electronically (E-File). These returns may be identified by the presence of Mod E-File printouts or "TRPRT Print Do Not Process" in lieu of an actual return.

      Note:

      If the TRPRT print states "TRPRT Print Do Not Process" in the top margin, circle the words "Do Not Process" .

    • Returns filed with a signed Form 1065X that is for the same tax period as the return.

  2. Do not correspond for a signature on "CIS" returns that have Form 13596 attached. IRM 3.11.15.3.1.1, Correspondence Imaging System (CIS) Returns, for processing instructions.

  3. If a signature is missing, correspond:

    Note:

    See IRM 3.11.15.3.1, Correspondence for returns that are incomplete and appear to be duplicate filings.

    If... Then...
    • The return is not signed on the line designated for the partner's signature, or

    • The jurat is not present on the line designated for the partner's signature (non-standard return),

    1. Edit Action Code 225 (Correspondence for Signature only) or 226 (International Correspondence for Signature only).

    2. Leave in batch and continue editing.

    Note:

    Paper returns sent in by the filer that states their return was rejected through the E-file system require a signature. Form 8453-B and/or Form 8453-P are not acceptable substitutes for a paper return.

  4. If the jurat is altered or stricken (crossed-out), See IRM 3.11.15.3.3 for frivolous return instructions.

  5. Accept a "signature declaration" (a signature with jurat obtained through IRS correspondence) if attached to the return.

    1. If the "signature declaration" is altered or stricken (crossed-out), See IRM 3.11.15.3.3. for frivolous return instructions.

    2. If the partnership responds with a self-prepared "signature declaration" it must contain the same language as the jurat on the tax return: i.e., "UNDER PENALTIES OF PERJURY, I DECLARE THAT I HAVE EXAMINED THIS RETURN, INCLUDING ACCOMPANYING SCHEDULES AND STATEMENTS, AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, IT IS TRUE, CORRECT AND COMPLETE."

  6. Since tax examiners are not expected to be handwriting experts, Section 301.6064-1 of Regulations allows the Service to presume that the signature on a return, statement or other document is the true signature of the person who actually signed the document.

    Note:

    A "✓" or "X" used to designate where the partner should sign the return is not considered a valid signature.

  7. The following types of signatures are not valid for Form 1065 or Form 1065-B:

    • Faxed signatures

    • Electronic signatures

    • Docusign digital signatures

    • Typed font

  8. If the general partner's or Limited Liability Company Member's signature is on the preparer's line, verify the partner's name with the Schedules K-1 and arrow the signature up to the general partner's or Limited Liability Company Member's signature line.

  9. Only one correspondence attempt is required for a signature.

♦Paid Preparer Checkbox Indicator♦

  1. The Paid Preparer Checkbox is located next to the taxpayer signature area. It indicates whether the partnership has elected to allow the Paid Preparer to answer questions about the return as it is processed.

  2. No action is required on amended or Short Record returns.

  3. Take the following actions when an entry is present in the Paid Preparer Checkbox:

    If... Then...
    Only the "YES" box is checked, Take no action.
    • The "NO" box is checked,

    • Neither box is checked, or,

    • Both boxes are checked,

    Circle the Paid Preparer's Telephone Number, if present. See Figure 3.11.15-10

    Figure 3.11.15-10

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♦Paid Preparer Section♦

  1. The Paid Preparer section is located below the taxpayer signature area at the bottom of Form 1065.

♦Paid Preparer Tax Identification Number (PTIN)♦
  1. The Preparer's Social Security Number (SSN) (2009 and prior revisions) or Paid Preparer's Tax Identification Number (PTIN) is located to the right of the Preparer's Signature in the PTIN box (Preparer's SSN or PTIN box for 2009 and prior revisions) at the bottom-right corner of Form 1065 (Page 1).

  2. No action is required on amended returns.

  3. A valid PTIN begins with the alpha "P" followed by an eight digit number (e.g., PXXXXXXXX). Circle the SSN/PTIN if it is invalid, all zeroes or all nines.

♦Employee Identification Number (EIN)♦
  1. The Firm's EIN (Paid Preparer's EIN - 2009 and prior revisions) is located below the Preparer's PTIN box at the bottom right corner of Form 1065 (Page 1).

  2. No action is required on amended returns.

  3. The Firm's EIN (Paid Preparer's EIN - 2009 and prior revisions) is a nine digit number. Circle the EIN if all zeroes, or all nines.,

♦Preparer Phone Number♦
  1. The Paid Preparer's Phone Number is located below the Firm's EIN at the bottom right corner of Form 1065 (page 1).

    If... Then...
    The return is amended, No action is required.
    The Preparer's Phone Number is more than 10 digits, No action is required.
    The Preparer's Phone Number is illegible or less than 10 digits, Circle the phone number. See Figure 3.11.15-11 below.

    Figure 3.11.15-11

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Tax Period

  1. This section contains instructions for:

    • Tax Period Ending

    • Tax Period Beginning

    • Initial Short Period Return

    • Final Short Period Return

    • Change in Accounting Period

    • Early Filed Return

Tax Period Ending

  1. All returns must have a Tax Period Ending.

  2. Edit the Tax Period Ending to the right of the form title in YYMM format.

    Exception:

    Do not edit the Tax Period Ending unless the Tax Period Ending is other than the current processing year (i.e., 2017).

    If... Then...
    The return is for the current processing year, No editing is necessary.
    The return is for a prior year, Edit the Tax Period Ending in YYMM format.
    The partnership has notated a Tax Period Ending other than the preprinted year on the return, Edit the Tax Period Ending in YYMM format based on the partnership indication. See Figure 3.11.15-12
    The Tax Period Ending is missing, incomplete or illegible,
    1. Review the return or attachments for the correct period.

    2. If found, edit the Tax Period Ending to the right of the form title in YYMM format.

    3. If unable to determine the Tax Period Ending after researching, process the return for the current processing year.

  3. Tax Periods reported under the 52/53-week are treated as:

    • Beginning on the first day of the calendar month beginning nearest to the first day of the 52/53-week tax year, and

    • Ending on the last day of the calendar month ending nearest to the last day of the 52/53-week tax year.

    If... Then...
    The Tax Period Ending is not more than 3 days after the beginning of the month, Edit the previous month.
    The Tax Period Ending is not more than 6 days before the end of the month, Edit the month shown on the return.
    The Tax Period Ending is more than 3 days after the beginning of the month or more than 6 days before the end of the month, Correspond to determine the correct tax period.
  4. If the resulting tax year is more than 12 months, correspond to obtain the correct period.

  5. On a Final return, if the tax period's month and/or year is later than the received date's month and year (future return), edit the tax period to be one month prior to the received date. See Figure 3.11.15-13

    Figure 3.11.15-12

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    Figure 3.11.15-13

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Tax Period Beginning - Initial, Final, or Short Period Form 1065 Return

  1. Edit the Tax Period Beginning (when present) to the left of the Form 1065 title area in MMDDYY format on an Initial, Final, or Short Period return as follows: See Figure 3.11.15-14 below.

    If... Then...
    The Tax Period Beginning is present, Edit the Tax Period Beginning (MMDDYY).
    The Day is not present in the Tax Period Beginning, Edit "01" as the day (MM01YY).
    The Tax Period Beginning is not present, Editing is not required.

    Figure 3.11.15-14

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    Please click here for the text description of the image.

"Initial" Short Period Return

  1. Identify an "Initial" Short Period Return by any of the following:

    1. The "Initial return" box is checked.

    2. The return or attachments indicates "INITIAL" , "FIRST RETURN" , "FIRST TIME FILER" , etc.

    3. An entry in Box E, "Date Business Started" , is within 12 months of the Tax Period Ending Date.

  2. Edit the Tax Period Beginning in MMDDYY format per IRM 3.11.15.8.2.

  3. Edit initial Return Code 2 to the left of Line G. (See IRM 3.11.15.13). (See Figure 3.11.15-14).

"Final" Short Period Return

  1. Identify a "Final" Short Period return by any of the following:

    1. The "Final return" box is checked.

    2. The return or attachments indicates "FINAL" , "OUT OF BUSINESS" , "NO LONGER LIABLE" , etc.

    3. Partnership cites IRC 708(b)(1)(B).

  2. Edit the Tax Period Beginning in MMDDYY format on a "Final" Form 1065 Return per IRM 3.11.15.8.2.

  3. A "Final" Short Period return ends on the date the partnership went out of business. Use the numeric designation of the calendar month in which it ended. If the partnership does not indicate the month the business ended, edit the Tax Period ending as one month prior to the return Received Date.

  4. Edit CCC "F" on the dotted line to the center of Line 1a (Form 1065).

  5. If the partnership files both a Final and Initial Short Period return using one EIN, which together cover no more than one 12 month or 52-53 week period and both returns are received together for editing, do the following:

    • Combine both returns into one return.

    • Combine money amounts from transcription lines.

    • If conflicting information is present (i.e., Number of Partners, Business Code etc.), use the information from the Final or latest return.

    • Process the combined return.

Change in Accounting Period

  1. If the tax period on the return is for a Short Period other than an "Initial" return (Form 1065, page 1, Line G, Box (1)) or a "Final" return (Form 1065, page 1, Line G, Box (2)), review Form 1065 for an indication that the partnership is changing their accounting period.

    If... And... Then...
    A statement the Partnership is changing its tax year:
    • National Office "Grant Letter " or,

    • Revenue Procedure 2006-46 or,

    • a copy of Form 1128 is attached.

    If research for Command Code BMFOLE shows a Transaction Code (TC) 053 or (TC) 054, (This is an indication that the Form 1128 or National Office "grant Letter" has been approved.) Continue Processing.

    Note:

    Do not edit CCC "Y."

    A statement the Partnership is changing its tax year:
    • National Office "Grant Letter " or,

    • Revenue Procedure 2006-46 or,

    • a copy of Form 1128 is attached.

    If research for Command Code BMFOLE shows a Transaction Code (TC) 059, (This is an indication that the Form 1128 or National Office "grant Letter" has been denied.) The return is unprocessable.
    • Edit Action Code "211" or "215" and correspond.

    • In the correspondence instruct the taxpayer to file a return for the next full period due.

    A statement the Partnership is changing its tax year:
    • National Office "Grant Letter " or,

    • Revenue Procedure 2006-46 or,

    • a copy of Form 1128 is attached.

    If research for Command Code BMFOLE does not show a TC 053, TC 054, or TC 059 Edit Action Code "211" or "215" and correspond with the taxpayer using Letter 319C.
    Original Form 1128 is attached If research for Command Code BMFOLE shows a Transaction Code (TC) 053 or (TC) 054, (This is an indication that the Form 1128 has been approved.) Continue Processing.

    Note:

    Do not edit CCC "Y."

    Original Form 1128 is attached If research for Command Code BMFOLE shows a Transaction Code (TC) 059, (This is an indication that the Form 1128 has been denied.) The return is unprocessable.
    • Edit Action Code "211" or "215" and correspond.

      • In the correspondence instruct the taxpayer to file a return for the next full period due.

    Original Form 1128 is attached If research for Command Code BMFOLE does not show Transaction Codes (TC) 053, (TC) 054, or (TC) 059. Route the Form 1065 and Form 1128 to Entity.
    • Initial return with letter ruling or,

    • Termination of Section 444 is notated or,

    • A copy of Form 8716 is attached.

    If research for Command Code BMFOLE shows a Transaction Code (TC) 054 or (TC) 055, (This is an indication that the Form 8716 or National Office "grant Letter" has been approved.) Continue Processing.

    Note:

    Do not edit CCC "Y."

    • Initial return with letter ruling or,

    • Termination of Section 444 is notated or,

    • A copy of Form 8716 is attached.

    If research for Command Code BMFOLE shows a Transaction Code (TC) 058, (This is an indication that the Form 8716 or National Office "grant Letter" has been denied.) The return is unprocessable.
    • Edit Action Code "211" or "215" and correspond.

    • In the correspondence instruct the taxpayer to file a return for the next full period due.

    • Initial return with letter ruling or,

    • Termination of Section 444 is notated or,

    • A copy of Form 8716 is attached.

    If research for Command Code BMFOLE does not show a (TC) 054, (TC) 055, or (TC) 058. Edit Action Code "211" or "215" and correspond with the taxpayer using Letter 319C.
    Original Form 8716 is attached. If research for Command Code BMFOLE shows a Transaction Code (TC) 054 or (TC) 055, (This is an indication that the Form 8716 has been approved.) Continue Processing.

    Note:

    Do not edit CCC "Y."

    Original Form 8716 is attached. If research for Command Code BMFOLE shows a Transaction Code (TC) 058, (This is an indication that the Form 8716 has been denied.) The return is unprocessable.
    • Edit Action Code "211" or "215" and correspond.

    • In the correspondence instruct the taxpayer to file a return for the next full period due.

    Original Form 8716 is attached. If research for Command Code BMFOLE does not show Transaction Codes (TC) 054, (TC) 055, or (TC) 058. Route the Form 1065 and Form 8716 to Entity.
    No explanation for the Short Period can be found   The return is unprocessable.
    • Edit Action Code "211" or "215" and correspond.

    • In the correspondence instruct the taxpayer to file a return for the next full period due.

Early Filed Return

  1. An Early Filed Return is defined as a return whose Received Date is prior to its Tax Period Ending Date.

  2. Never send back an Early-Filed return to the partnership. Correspond for any missing information before suspending the return:

    If... And... Then...
    The return is early-filed, Is not a "Final" return, Edit Action Code "480" .
    1. Note:

      When correspondence issues are present on an early-filed return, edit Action Code "211" to the return and edit Action Code "480" to Form 4227.

    Caution:

    If Form 8822 (Change of Address) is attached, See (3) below.

    The return is early-filed, A "Final" return,
    1. Edit CCC "F" .

    2. Edit the Tax Period ending to be one month prior to the Received Date.

      Example:

      If the Received Date is April 2018 and the Tax Period Ending Date is June 2018, change the Tax Period Ending Date to March 2018 (1803).

      (See Figure 3.11.15-13).

  3. If Form 8822, Change of address or Form 8822-B, Change of Address or Responsible Party - Business is attached to the return, compare the name and address information on the Form 8822 or Form 8822-B to the return.

    If... Then...
    The information is the same, Take no action and continue editing the return.
    The information is different,
    1. Edit the address from Form 8822 or Form 8822-B to the entity section of the return.

    2. Notate "8822/8822–B Detached" on the tax return.

    3. Detach Form 8822 or Form 8822-B and route to Entity Control follow local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

♦Entity Perfection - General♦

  1. The entity area of a tax return identifies the taxpayer on the Business Master File. The entity area of the return contains the following:

    1. Employer Identification Number (EIN)

    2. Name

    3. "In-care-of" name

    4. Address

♦Bankruptcy♦

  1. If the Form 1065 indicates bankruptcy (e.g., shows RECEIVER, TRUSTEE, or DEBTOR IN POSSESSION) in the entity area or on an attachment, route to Entity Control. Follow local procedures using Form 13934 , Entity Document/C&E Merge Transmittal.

♦Entity Perfection - Employer Identification Number (EIN)♦

  1. The EIN is a nine digit number (XX-XXXXXXX) assigned to identify the partnership.

  2. The EIN is located in the upper right of Form 1065 (Employer Identification Number, Box D).

  3. Determine the EIN as follows:

    1. If... And... Then...
      EIN is missing, You can determine the correct EIN from the attachments and/or schedules, 1. Edit the EIN to the proper location.
      The EIN is either a PTIN or ITIN (Individual Tax Identification Number), Unnumbered
      1. Remove return from batch.

      2. Forward to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

      The EIN is either a PTIN or ITIN, Numbered,
      1. Edit Action Code 320.

      2. Leave return in batch.

      Multiple EINs are present, Unnumbered,
      1. Remove return from batch.

      2. Forward to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

      Multiple EINs are present, Numbered,
      1. Edit Action Code 320.

      2. Leave return in batch.

      The EIN contains any of the following conditions and cannot be determined from attachments and/or schedules:
      • Illegible;

      • Missing;

      • Other than 9 digits;

      • All zeroes; or,

      • All nines,

      Unnumbered,
      1. Circle all illegible EINs, zeroes or nines.

      2. Research IDRS.

      3. If found, edit to the proper location.

      4. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

      The EIN contains any of the following conditions and cannot be determined from attachments and/or schedules:
      • Illegible;

      • Missing;

      • Other than 9 digits;

      • All zeroes; or,

      • All nines,

      Numbered,
      1. Circle all illegible EINs, zeroes or nines.

      2. Edit Action code 320.

      3. Leave return in batch.

      "PENDING" , "APPLIED FOR" , etc., is indicated in the EIN area, Unnumbered,
      1. Research IDRS.

      2. If found, edit to the proper location.

      3. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

      "PENDING" , "APPLIED FOR" , etc., is indicated in the EIN area, Numbered,
      1. Edit Action Code 320.

      2. Leave return in batch.

Disregarded Entity
  1. An entity classified as a partnership, will become a "disregarded entity" when the entity’s membership is reduced to one member.

  2. If a Form 1065 contains the notation, "disregarded entity" , in the header or entity portion of the return (on Page 1, Form 1065), process as follows:

    1. Edit Audit Code "1" in the left margin of Form 1065 next to Line 9 in "1-1" format.

    2. Check the attachments for a name, EIN, address and other information identifying the partnership.

    3. If found, edit the entity information on Page 1 of the return and continue processing.

    4. If NOT found, correspond with the taxpayer for the legal name and the "doing business as" (dba) name(s) of the partnership, if the address information is present. See also IRM 3.11.15.3.1 for Correspondence procedures.

    5. If the number of Schedule K-1 is 1 See IRM 3.11.15.16 (6)

♦Entity Perfection - Name Control♦

  1. The Name Control consists of four characters or less:

    1. Valid characters are alpha, numeric, ampersand (&), hyphen (-) and blank. However, blanks are only valid in the last three positions.

    2. Disregard the word "THE" in the Name Control only when followed by more than one word.

      Note:

      If an individual and a trade name are present and it can be determined that the trade name is for a corporation or partnership, follow the Name Control procedures for corporations or partnerships. If other than a corporation or partnership, follow the Name Control procedures for individuals, regardless of which line the individual owner's name is listed.

  2. See job aid Document 7071A, Name Control Job Aid - For Use Outside the Entity Area, to determine the Name Control.

  3. Name controls for EINs assigned by the MODI-EIN program are different. If the EIN prefix begins with 20, 26, 27, 45, 46, 47, 81, or 82, then the name control will be the first four characters of the first name in the Primary Name Line.

  4. If Line G, box (3), "Name Change" , is checked, route the return to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

  5. Edit the Name Control as follows:

    1. If... And... Then...
      Able to determine the Name Control,   Underline the Name Control
      Unable to determine the Name Control, Unnumbered,
      1. Research IDRS.

      2. If found, edit to the proper location.

      3. If not found, route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal.

      Unable to determine the Name Control, Numbered,
      1. Edit Action Code 352 (Name Research).

      2. Leave return in batch.

♦Entity Perfection - "In-Care-of" Name♦

  1. An "in-care-of" name can be identified by the words "in care of" or the symbols "c/o" or "%" (percent).

  2. Ensure the "in-care-of" name is located in the proper location.

    Note:

    Always circle the "in-care-of" symbol ("%" or "c/o" ) if it is present with an address. Do not use the ampersand (&) or the percent sign (%) when editing address information.

    If... Then...
    The in-care-of name is located on the street address line preceding the street address, No editing is required.
    The "in-care-of" name is located above the first name line or below the street address, Arrow the "in-care-of" name so it appears below the first name line and above the street address.
    The "in-care-of" name is shown on an attachment, Edit the "in-care-of" name above the street address beginning with the "%" or "c/o" in the first position.
    The street address for the "in-care-of" name is different from the street address of the partnership,
    1. Arrow the "in-care-of" street address below the "in-care-of" name or edit the "in-care-of" street address below the "in-care-of" name if located on an attachment.

    2. Circle the partnership street address and input TC 014 (See IRM 3.11.15.9.5).

  3. A change to the "in-care-of" name can be determined by any of the following:

    • A check mark in the "Name Change" boxLine G, Box (3)

    • A check mark in the "Address Change" boxLine G, Box (4)

    • An indication that the "in-care-of" name is changed (i.e., the partnership crossed out the original "in-care-of" name and added the new name or has entered a new "in-care-of" name in brackets).

    If... Then...
    An "in-care-of" name is changed but there is no indication of an address change,
    1. Edit the "in-care-of" name as shown above.

    2. Continue editing the return.

    An "in-care-of" name is present and the "Address change" box(Line G, Box (4)) is checked or there is an indication of an address change,
    1. Edit the "in-care-of" name as shown above.

    2. Correct the address. (IRM 3.11.15.9.5)

    3. Continue editing the return.

♦Entity Perfection - Domestic Addresses♦

  1. Perfection of the address is necessary when the mailing address (Street or P.O. Box) is not easily identified.

    Exception:

    Do not perfect the address on amended returns (CCC "G" ).

  2. A business may have two addresses. One is the mailing address and the other is the location address or physical location of the business.

  3. The procedures for perfection of an address on returns are as follows:

    If... And... Then...
    There is an indication on an attachment that the address has been changed,   Edit the new address in the entity section of the return. (See Figure 3.11.15-15 )
    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party- Business, is attached, All of the following applies:
    • Mailing address information is the same,

    • No location address is listed on Form 8822 or Form 8822-B, Line 7,

    • No entry on Form 8822-B, Lines 8 or 9,

    Take no action.
    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party- Business, is attached, Any of the following applies:
    • Mailing address information is different,

    • Location address is listed on Form 8822 or Form 8822-B, Line 7,

    • An entry is listed on Form 8822-B, Lines 8 or 9,

    Detach Form 8822 or Form 8822-B and route to Entity Control following local procedures using Form 13934, Entity Document/C&E Merge Transmittal. See IRM 3.11.15.8.6 (3)(3), Early Filed Return.
    Both a P.O. Box and a street address are shown,  
    1. Notate "TC 014" in the upper left margin.

    2. Input TC 014.

    Two street addresses are shown,  
    1. Underline the second street address.

    2. Notate "TC 014" in the upper left margin.

    3. Input TC 014.

    One street address is shown, The partnership changed the address to a P.O. Box,
    1. Notate "TC 014" in the upper left margin.

    2. Input TC 014.

    The city and state are not shown on the return but are shown on an attachment,   Edit the city and state in the entity section of the return.
    The ZIP Code is missing or illegible, Is not available from the return or attachments, See Document 7475,State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, to determine the ZIP Code.

    Note:

    Edit the 3 digits followed by "01" of the first ZIP code listed for the applicable state (e.g., "99501" for Alaska).

    Only the first three digits of the ZIP Code can be determined,   Edit "01" for the fourth and fifth digits.
    The "Address change" Box G(4) is checked, An "in-care-of " name is present,
    1. Edit the "%" (percent sign) or "c/o" to the left of the "in-care-of" name (in the first position) followed by the appropriate name.

    It is necessary to edit the street address,   See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries for current Address/Street Abbreviations.
    The address contains information other than a street address or P.O. Box,   No perfection is necessary. ISRP will enter the complete address.

    Note:

    Always circle the "in care of" symbol ("c/o" or "%" ) if it is present with an address. Do not use the ampersand (&) or the percent symbol (%) when editing address information.

  4. The U.S. Postal Service established new address requirements for APO/DPO/FPO addresses. If the old address appears (i.e., APO New York, NY 091XX), convert to the new state code abbreviation based on the ZIP Code (i.e., the previous example would be converted to APO AE 091XX). APO/FPO addresses are considered domestic addresses. Refer to conversion chart below:

    Zip Code State Code
    340 AA
    090-098 AE
    962-966 AP

    Figure 3.11.15-15

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♦Entity Perfection - Foreign Address♦

  1. A foreign (international) address is any address that is not in the 50 states or the District of Columbia.

  2. Returns with APO or FPO addresses are considered domestic addresses. (See IRM 3.11.15.9.5)

  3. Route returns with a foreign address to Ogden Campus Submission Processing (OSPC) for processing. Prepare Letter 86C to inform the partnership that the return has been sent to Ogden.

  4. Returns with addresses in the following U.S. Possessions/Territories are considered to be a foreign address for processing purposes but are edited in the same way as domestic addresses.

    1. A two-character alpha code must be edited for the possession/territory name.

      U.S. Possession/Territory Abbreviation
      American Samoa AS
      Federated States of Micronesia FM
      Guam GU
      Marshall Islands MH
      Northern Mariana Islands MP
      Palau PW
      Puerto Rico PR
      Virgin Islands (U.S.) VI
    2. A ZIP Code must be present on U.S. Possessions/Territories. Edit the appropriate ZIP Code if one is not provided. See Exhibit 3.11.15-1, U.S. Possessions/Territories ZIP Codes.

  5. All other foreign addresses are edited the same as a domestic address with the following exceptions:

    1. The foreign country must be the last entry in the address.

    2. Circle the foreign country and edit the country code preceded by a "/" and followed by "/$" (e.g., edit Germany as "/GM/$" ) as the last entry in the address. See Document 7475,State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, for official foreign country codes.

    3. A unique country code will be edited for returns filed with an address in Canada. See IRM 3.11.15.9.6.1Country Code – Canada.

      Note:

      Submission Processing BMF Foreign Address Job Aid (Number 2324-002) provides examples for editing foreign addresses.

    4. If the foreign address is from Australia, Brazil, Cuba, Italy, Mexico, or The Netherlands, check if the address contains a province, state, or territory.

      If... Then...
      A province, state or territory name is present,
      1. Circle province, state or territory name.

      2. Edit appropriate abbreviation. See Exhibit 3.11.15-2

      Province, state or territory is shown in abbreviated format, Continue editing the return.
      A province, state, or territory name is not present, Continue editing the return.
    5. A ZIP Code or state is not required on a foreign address. Foreign addresses use a postal code that is entered before the city or foreign country and is part of the address.

♦Foreign Address - Canada Only♦
  1. In an effort to assist Compliance with workload assignment, returns filed with an address in Canada will be edited using a unique Country Code based on the Province/Territory.

    If... Then...
    The foreign address contains a Canadian Province/Territory name or abbreviation listed in the table below,
    1. See table below to ensure the correct Canadian Province/Territory is present or edited to the return.

    2. Edit the appropriate Country Code based on the province/territory preceded by a "/" and followed by a "/$" as the last entry in the address.

    The foreign address does not contain a Canadian Province/Territory name or abbreviation listed in the table below,
    1. Circle the country name.

    2. Edit the country code "/CA/$" as the last entry in the address.

    ♦Canadian Province/Territory Abbreviations, Postal Codes and Foreign Country Code Tables♦

    Canadian Province/Territory Province/Territory Abbreviation Postal Code beginning Country Code
    Alberta AB T XA
    British Columbia BC V XB
    Manitoba MB R XM
    New Brunswick NB E XN
    Newfoundland and Labrador NL A XL
    Northwest Territories NT X XT
    Nova Scotia NS B XS
    Nunavut NU X XV
    Ontario ON K, L, M, N, or P XO
    Prince Edward Island PE C XP
    Quebec QC G, H, or I XQ
    Saskatchewan SK S XW
    Yukon YT Y XY
  2. The rest of the foreign address is edited using procedures in IRM 3.11.15.9.6.

North American Industry Classification System (NAICS) Code

  1. The Principal Business Activity (PBA) Code is based on the North American Industry Classification System (NAICS). These Codes provide critical data for Statistics of Income, Examination, Research and other Service organizations.

  2. The NAICS Code is a four (prior year) or six-digit number found on Page 1, Box C of Form 1065.

  3. Only one NAICS Code can be used on the return. Edit the NAICS Code as follows:

    If... Then...
    A legible four (prior year) or six-digit NAICS Code is shown in Box "C" ,

    Note:

    The number is invalid if it contains all repeating numbers, i.e., "000000" , "333333" , "666666" , "999999" , etc.

    No editing is necessary.
    The return is an Amended return (CCC "G" ), Do not edit a NAICS Code.
    A NAICS Code is
    1. Not present,

    2. Illegible,

    3. Invalid (other than 4 or 6 digits or contains all repeating numbers, i.e., "000000" , "333333" , "666666" , "999999" , etc.),

    Edit NAICS Code 999000 in Box C. See Figure 3.11.15-16.
    There is more than one NAICS Code, Circle all but the first NAICS Code listed.

    Figure 3.11.15-16

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Date Business Started

  1. The Date Business Started is shown in Box E on page 1 of Form 1065.

    Note:

    It is not necessary to edit the Date Business Started on a Short Record return.

  2. Edit the date business started in YYYYMM format to the right of the partnership entry when any of the following conditions are present:

    1. If... Then...
      A partnership enters a future date (after the tax period ending shown on the return) as the date business started, DO NOT EDIT.
      Only year is shown, Edit "01" for month. See Figure 3.11.15-17 below.
      Only month is shown, Edit "1950" for year. See Figure 3.11.15-17 below.
      The date business started is illegible or indeterminable,
      1. Circle the entry.

      2. Edit date as "195001" .

      Box "E" is blank,
      1. Leave blank.

      2. Edit CCC "A" .

      Note:

      Do not edit CCC "A" on Short Record returns.

      The date only shows two digit year, not century,
      Example: 01/01/13
      Edit century above year.

    Figure 3.11.15-17

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Total Assets

  1. This section provides instructions for editing Total Assets At End of Year, Box "F" , on Form 1065.

  2. Box "F" must have an entry unless one of the following conditions is present:

    If... Then...
    Schedule B, Question 6 is answered "YES" , The partnership is not required to complete Box "F" , Schedules L, M-1 and M-2. See Figure 3.11.15-18 below.
    Schedule L is crossed out or annotated zero (0), "none" or not applicable (n/a), Leave Box F blank.
    There is an indication of single entry bookkeeping
    1. Box "F" is blank, and

    2. The "Cash" box on Line H is checked, and

    3. there are no entries on Lines 1-22 on Form 1065, page 1,

    Leave Box F blank.
    The return is a "Final" return, Edit the return as a Final return. (See IRM 3.11.15.8.4 and IRM 3.11.15.15.4)
    There is no transcription line (T-line) with an entry, Edit the return as a Short Record. (See IRM 3.11.15.5.6.4 for Inactive Return instructions.)

    Reminder:

    Edit the return as a Short Record if Box "F" is the only transcription line (T-line) with an entry, (See IRM 3.11.15.5.6.4 for Inactive Return instructions).

  3. If Box "F" information is required and the amount is missing, edit the amount shown on Line 14, Column (d), Schedule L, Form 1065. See Figure 3.11.15-19 below.

  4. If Line 14, Column (d) is blank and cannot be computed, use the amount on Line 22, Column (d).

  5. If Box "F" information is required and Schedule L, Balance Sheet is missing or blank, correspond for Schedule L (See IRM 3.11.15.27).

    Figure 3.11.15-18

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    Figure 3.11.15-19

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♦Initial Return Code♦

  1. Edit an Initial Return Code "2" in the margin to the left of Line G if any of the following conditions are met:

    1. "Initial Return" box, under the entity area, is checked.

    2. Entry in Box "E" , "Date Business Started" , has a date which is within 12 months from the tax period ending date.

    3. Partnership notation such as, "FIRST RETURN" , "NEW CORPORATION" "NEW PARTNERSHIP" , etc., See Figure 3.11.15-20 below.

    Reminder:

    Edit Tax Period Beginning on "Initial" Form 1065 return per IRM 3.11.15.8.2.

    Figure 3.11.15-20

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Technical Termination Code

  1. If Line G box (6) is checked and box (3), (4), and (5) are not checked, then edit the Technical Termination Code "1" just left of box (6)

    Figure 3.11.15-21

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♦Computer Condition Codes♦

  1. Computer Condition Codes (CCC) are used to identify a special condition or computation for the computer. CCCs post to the Master File.

  2. CCCs are edited in the dotted portion of Lines 1a and 1b of Form 1065. See Figure 3.11.15-22 below.

    Figure 3.11.15-22

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CCC "A" - Date Business Started

  1. Edit CCC "A" when the "Date Business Started" , Box E is blank.

    Note:

    Do not edit CCC "A" on Short Record returns.

♦CCC "B" - Schedule M-3♦

  1. Edit CCC "B" when any of the following conditions are met:

    1. Schedule M-3 box (Line J on Form 1065 or Form 1065-B) is checked or

    2. A Schedule M-3 is attached.

  2. Enter Audit Code "8" if Schedule M-3 is attached to Form 1065 or Form 1065-B. (See IRM 3.11.15.19.1 (11))

    Caution:

    All returns with a Schedule M-3 attached or a check in the box for Schedule M-3 must be sent to Ogden for processing.

♦CCC D - Reasonable Cause for Failing to Pay Timely♦

  1. Do not edit CCC "D" if the taxpayer requests abatement for "Failing to Pay Timely" when the return is submitted. Send Letter 1382C to inform the taxpayer of the proper procedure to follow to request penalty abatement if and when a penalty is assessed.

  2. IMPORTANT: Edit CCC "D" if an internal use form (i.e., Form 13133, Expedite Processing Cycle) or routing slip is attached and indicates "DO NOT ASSESS FAILURE TO PAY PENALTY" .

    Note:

    Do not enter CCC "D" if the return was prepared by IRS under IRC 6020(b) and the return due date (without regard to extensions) is after July 30, 1996.

♦CCC "F" - Final Return♦

  1. Edit CCC "F" when the "Final Return Box" is checked or there is another indication the partnership is not liable for future returns. Notations may include (but are not limited to):

    • Final

    • Deceased

    • Out-of Business

    • Liquidation

    • Exempt under IRC 501(c)(3)

    • Dissolved

    • Cites IRC 708(b)(1)(B)

    • Notates "Filed in accordance with Rev. Proc. 2003-84"

    • Return is a "Nominee" return.

    • "761(a) election" notated and is accepted by Examination.

    Reminder:

    Edit Tax Period Beginning on Final Form 1065 per IRM 3.11.15.8.2.

♦CCC "G" - Amended Return♦

  1. See IRM 3.11.15.5.5, Amended Returns.

CCC "I" (i) - Tax Straddles and Future Contracts (Form 6781)

  1. Edit CCC "I" (i) when Form 6781 (Gains and Losses From Section 1256 Contracts and Straddles) is attached. See Figure 3.11.15-23 below.

    Note:

    Edit an upper case letter "I" (as in "Idaho" ), with a line drawn on the top and on the bottom, to distinguish this letter from the number "1" (one) and to facilitate ISRP transcription.

    Figure 3.11.15-23

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CCC "L" - Treaty Based Positions

  1. Edit CCC "L" when taxpayer writes Section 6114 Election on the return or Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), is attached.

CCC "P" - BMF Mail Indicator

  1. No editing required.

♦CCC "R" - Reasonable Cause for Failing to File a Timely Return♦

  1. CCC "R" is no longer edited when a reason is given by the partnership for a delay in filing a return. Issue Letter 1382C and continue editing the return.

  2. Edit CCC "R" on the partnership return when any of the following conditions are present:

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ "

    • "≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Reminder:

    All "R" coded returns must have an IRS Received Date. If one is not present, edit the IRS Received Date in the middle of the return.

♦CCC "S" - Asset Allocation Statement under Section 338♦

  1. Edit CCC "S" when Form 8883, Asset Allocation Statement under Section 338, is attached.

CCC "T" - ♦ Investor Reporting of Tax Shelter Registration♦

  1. Edit CCC "T" when Form 8271, Investor Reporting of Tax Shelter Registration Number, is attached.

    Note:

    For Tax Periods 200711 and prior.

  2. Edit CCC "T" when Form 8886, Reportable Transaction Disclosure Statement, is attached.

    Note:

    For Tax Periods 201301 and subsequent.

♦CCC "W" - Return Cleared by Statute♦

  1. CCC "W" is used when the return has been cleared by Statute Control. (See IRM 3.11.15.5.1)

CCC "X" - Refund/Settlement Freeze

  1. Edit CCC "X" on partnership returns filed by Publicly Traded Partnerships that include a tax computation of 3.5% in the margin to the right of Line 22 (Form 1065) or an attachment. (See IRM 3.11.15.22.15 (Ordinary Business Income (Loss)) and IRM 3.11.15.68 (Publicly Traded Partnerships).)

  2. Edit CCC "X" on partnership returns that have Form 4255 (Recapture of Investment Credit) attached to repay any unused Qualifying Therapeutic Discovery Project (QTDP). These returns will have a notation "QTDP" and money amount in the margin near Line 22. (See IRM 3.11.15.22.16).

  3. Edit CCC "X" on partnership returns if Form 8697, Interest Computation Under the Look-Back Method for Completing Long-Term Contracts or Form 8866, Interest Computation Under the Look-Back Method for Property Depreciated Under the Income Forecast Method is attached and a $ amount (interest due) is written by the taxpayer in the bottom margin of Form 1065. See IRM 3.11.15.4.1 for instructions regarding Form 8697 and Form 8866.

Reserved

  1. This subsection is reserved.

CCC "1" - Like-Kind Exchange

  1. Edit CCC "1" if Form 8824, Like-Kind Exchange, is attached.

CCC 2 - Statement of Foreign Financial Assets

  1. Edit CCC "2" if Form 8938, Statement of Specified Foreign Financial Assets, is attached. See IRM 3.11.15.23.15.

♦CCC "3" - No Reply to Correspondence♦

  1. Edit CCC "3" when the partnership return is unprocessable.

♦CCC "4" - IRC 6020(b) Return♦

  1. Edit CCC "4" when the IRS Compliance Function prepared a return and the Revenue Officer entered "IRC 6020(b)" .

    Note:

    CCC "4" cannot be used with CCC "R" .

CCC "5" - Common Trust Return

  1. Edit CCC "5" when the partnership return is identified as a Common Trust. (See IRM 3.11.15.5.6.2.)

CCC "6" - Suppress the Failure to File on Correct Media Penalty

  1. Edit CCC "6" when the return has more than 100 partners and any of the following conditions are present:

    • Inactive return

    • Nominee return

    • IRC 501d religious organization

    • Substitute for Return (SFR)

    • Re-entry/Re-input returns that have previously been e-filed.

  2. CCC "6" cannot be used with any other Computer Condition Code except "F" , "R" , "W" , "4" , "5" , "8" , and "9" .

CCC "8" - Section 761(a) Returns

  1. Edit CCC "8" when a partnership return is identified as a Section 761(a), Return and/or Election and has been selected or accepted by Exam. (See IRM 3.11.15.5.6.1.)

CCC "9" - Foreign Partnership (Ogden Only)

  1. Edit CCC "9" when the address on the partnership return is foreign.

Line I - Number of Schedules K-1 (or Number of Partners)

  1. The number of Schedules K-1 (Form 1065) or number of partners is found on Form 1065, page 1, Line I ("I" as in "Idaho" ). See Figure 3.11.15-24 below.

  2. A Schedule K-1 with the notation of "Book/Tax" , "Book/Tax Partner" or similar should be treated as a statement to the return, and should not be processed as a regular Form 1065, K-1.

  3. Only a Schedule K-1 (Form 1065) or an attachment to Form 1065 containing the information required on Schedule K-1 is acceptable. Refer to IRM 3.0.101 for complete instructions to edit and process Schedules K-1.

    Note:

    After editing Line I, detach current year (TY2017), two preceding years (TY2016 and TY2015) and future Schedules K-1.

    Figure 3.11.15-24

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  4. Do not correspond for missing, incomplete, or incorrect (See paragraph (3) above) Schedules K-1 (Form 1065) or number of partners (Line I) on the following types of return. Instead, edit Line I (i) as follows:

    If... Then...
    Amended Return ("G" coded) (See IRM 3.11.15.5.5, Amended Returns), Do not edit Line I.
    Final Return (See IRM 3.11.15.15.4), Edit "2" on Line I.
    Reinput/Re-entry document (See IRM 3.11.15.5.4), Edit "2" on Line I.
    Returns filed for TY 2014 and prior.

    Note:

    Correspond for current year (TY2017) and two preceding years (TY2016 and TY2015)

    .
    Edit "2" on Line I.
    Short Record Return:
    • 761(a) return (See IRM 3.11.15.5.6.1)

    • Common trust (See IRM 3.11.15.5.6.2)

    • Nominee return (See IRM 3.11.15.5.6.3)

    • Inactive return (See IRM 3.11.15.5.6.4)

    Edit "2" on Line I.
    Section 501(d) return (Religious and Apostolic Organizations), Edit "2" on Line I.
    Substitute for Return (SFR) (See IRM 3.11.15.5.3 and IRM 3.11.15.5.3.3), Edit "2" on Line I.
    IRC 6020(b) return (See IRM 3.11.15.5.3.1), Edit "6" on Line I.
    Treas. Regs. 1.736-1 (Payment to Retiring Partner), Edit "2" on Line I.
    Form 1065, Line 22 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Edit "2" on Line I.

    Exception:

    If Form 1065, Line 22, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 8825 is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , then correspond for missing Schedules K-1.

    Payee is a foreign entity Edit 2 on Line I.
  5. A valid entry on Line I must be all numeric "2" through "999,999" .

    If... Then...
    The partnership has entered a valid numeric on Line I,
    1. No action required.

    2. Continue editing the return.

    The partnership has written the number of Schedules K-1 (Form 1065) in a non-numeric fashion ("two" instead of "2" ),
    1. Edit the numeric equivalent on Line I.

    2. Circle the non-numeric characters.

    3. Continue editing the return.

    Line I is blank or zero and no Schedules K-1 (Form 1065 ) are attached and does not meet the correspondence exception in Paragraph (4), above,
    1. Correspond for Schedules K-1, Form 1065, using Letter 1355C.

    2. Notate the letter sent in the bottom right margin of Form 1065.

    3. Continue editing the return.

    The partnership has entered "1" on Line I, for the number of partners or as the number of Schedule K-1 attached, See Paragraph (6), below.
    The partnership has entered more than 100 on Line I, See Paragraph (7), below.
    The partnership has entered more than 999,999 on Line I, Edit "999,999" on Line I.
    Line I is blank and the attached Schedules K-1 (Form 1065) do not appear to exceed 20,
    1. Count the attached Schedules K-1 (Form 1065) and edit the total to Line I. (See Figure 3.11.15-25)

    2. Continue editing the return.

    Line I is blank and the attached Schedules K-1 (Form 1065) exceed 20,
    1. Correspond for the total number of Schedules K-1 (Form 1065) using Letter 1355C or other approved local correspondence procedures.

    2. Notate the letter sent in the bottom right margin of Form 1065.

    3. Continue editing the return.

  6. If the partnership has indicated the number of Schedules K-1 is "1" , or Line I is blank or zero, and only one K-1 is attached, follow the procedures below:

    If... Then...
    The partnership indicates any of the conditions shown in (4) above,
    1. Edit the return following the procedures in (4) above.

    2. Continue editing the return.

    There is one Schedule K-1 attached showing 100% interest and the Partnership indicates any of the following:
    • Limited Partnership (LP),

    • Limited Liability Partnership (LLP),

    • Limited Liability Company (LLC),

    • Limited Liability Land Trust (LLLT), or

    • Unincorporated Business Organization (UBO)

    • Disregarded Entity

    or

    Box b, c or d is checked on Schedule B, Question 1, or

    Either box is checked on Schedule K-1, Part II, Line G.
    1. Edit CCC "F" .

      Reminder:

      Edit Tax Period Beginning Date on Final returns.

    2. Circle out the number "1."

    3. Edit "2" on Line I.

    4. Advise the partnership that we are deleting the partnership filing requirement with a non-suspense letter. Use Letter 3733C.

      Exception:

      If the partnership has indicated the return is a "Final" return, do not send Letter 3733C.

    5. Notate the letter sent in the lower right margin of Form 1065.

    6. Continue editing the return.

    There is one Schedule K-1 attached showing 100% interest and the Partnership does not indicate any of the following:
    • Limited Partnership (LP),

    • Limited Liability Partnership (LLP),

    • Limited Liability Company (LLC),

    • Limited Liability Land Trust (LLLT), or

    • Unincorporated Business Organization (UBO)

    • Disregarded Entity

    1. Correspond using Letter 1355C or other approved local correspondence procedures, informing the partnership that they cannot have a 100% partner. Ask for an explanation.

    2. Notate the letter sent in the bottom right margin of Form 1065.

    3. Continue editing the return.

    Schedule K-1 (Form 1065) shows two names in the Partner's Name and Address Section,
    1. Correspond requesting separate Schedules K-1 (Form 1065) using Letter 1355C or other approved local correspondence procedures.

    2. Notate the letter sent in the bottom right margin of Form 1065.

    3. Continue editing the return.

    There is only one Schedule K-1 (Form 1065) attached that does not indicate 100% interest or no Schedules K-1 attached,
    1. Correspond for the total number of Schedules K-1 (Form 1065) using Letter 1355C or other approved local correspondence procedures.

      Caution:

      Do not correspond for any return identified in (4) above.

    2. Notate the letter sent in the bottom right margin of Form 1065.

    3. Continue editing the return.

  7. Correspond for missing Schedules K-1 (Form 1065) using Letter 1355C only if:

    1. There are NO Schedules K-1 (Form 1065) attached andForm 1065, Line 22 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , or

    2. Form 8825 is attached, Line 21 on Form 8825≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , or

    3. The exceptions in (4) above are not met.

      Note:

      Notate the letter sent in the lower right margin of Form 1065.

  8. For partnership with more than 100 Schedules K-1 (Form 1065), check the return and attachments for any indication from the partnership requesting a waiver from filing electronically or a request for abatement of the failure to file on correct media penalty.

    If... Then...
    A letter is attached requesting a waiver or exemption from filing electronically,

    Note:

    A waiver request can be identified by a notation at the top of the request stating, in large letters,

    "WAIVER REQUEST; IRC 6011(E)(2)" ,
    1. Detach the letter.

    2. Fax the request to:
      Ogden IRS Campus
      E-File Team 203
      (801) 620-7622
      (ensure the name, address, EIN, tax period and mailing address of the partnership is on the request)

    3. Indicate on the fax that the "WAIVER REQUEST WAS RECEIVED WITH THE ORIGINAL RETURN" .

    4. Edit the number of Schedules K-1.

    5. Continue editing the return.

    A letter is attached requesting abatement of the failure to file on correct media (electronic) penalty,
    1. Detach the letter.

    2. Fax the request to:
      Ogden IRS Campus
      E-File Team 203
      (801) 620-7622
      (ensure the name, address, EIN, tax period and mailing address of the partnership is on the request)

    3. Indicate on the fax that the "WAIVER REQUEST WAS RECEIVED WITH THE ORIGINAL RETURN" .

    4. Edit the number of Schedules K-1 (Form 1065) on Line I.

    5. Continue editing the return.

    No indication on return or letter is attached,
    1. Edit the number of Schedules K-1 (Form 1065) to Line I.

    2. Continue editing the return.

    Figure 3.11.15-25

    This is an Image: 33495027.gif
     

    Please click here for the text description of the image.

Salary and Wage Code

  1. Edit a "1" to the right of Page 1, Line 9 (on Form 1065) if an entry greater than zero is present on any of the following:

    1. Form 1065, Page 1, Line 9,

    2. Schedule C (Form 1040), Line 26,

    3. Schedule F (Form 1040), Line 22, (2010 and prior revisions, Schedule F, Line 24) See Figure 3.11.15-26 below.

    4. Form 8825, Line 13, Column A through H

    5. Form 1125-A, Line 3,

    6. Form 4835, Line 20, or

    7. An attachment showing an amount for salaries, wages or labor.

  2. DO NOT edit for the following:

    1. Contract, outside, custom or miscellaneous labor,

    2. Temporary help,

    3. Management fees,

    4. Janitorial service (or any other type of service),

    5. Maintenance fees, or

    6. Commissions.

    Figure 3.11.15-26

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    Please click here for the text description of the image.

EPMF Code

  1. The Employee Plan Master File (EPMF) is a master file maintained at Enterprise Computing Center at Martinsburg (ECC-MTB). This file consists of various types of tax sheltered Pension/Profit Sharing Plans.

  2. Edit a “1” to the right of Page 1, Line 18 on Form 1065 if an entry greater than zero (±) is present on any of the following:

    1. Form 1065, Page 1, Line 18,

    2. Schedule C (Form 1040), Line 19,

    3. Schedule F (Form 1040), Line 23,

    4. Form 4835(Form 1040), Line 21, or

    5. An attachment showing an amount for retirement plan, pension and/or profit sharing.

Additional Partnership Perfection (previously Partnership Edit Sheet - Form 6141)

  1. This section provides instructions for coding entries previously shown on the Partnership Edit Sheet, Form 6141.

    Caution:

    Effective January 1, 2006, the edit sheet was eliminated. Entries previously entered on the edit sheet are edited in the left margin next to Line 9 of Form 1065.

  2. Each entry is preceded by the numeric for the applicable line from the Edit Sheet.

  3. Edit entries in numeric order, such as, "1- 4" , "4-1" .

    If... Then...
    Audit Code, Edit "1" followed by appropriate Audit Code. See IRM 3.11.15.19.1
    Special Income Code, Edit "2" followed by the Special Income Code "1" (i.e., "2 - 1" ). See IRM 3.11.15.19.2
    Installment Sale Indicator, Edit "3" followed by the appropriate Installment Sale Indicator. (i.e., "3 - 1" ). See IRM 3.11.15.19.3
    Nonrecourse Loan Code, Edit "4" followed by the Nonrecourse Loan Code "1" (i.e., "4 - 1" ). See IRM 3.11.15.19.4
    Historic Structure Code, Edit "6" followed by the Historic Structure Code "3" (i.e., "6 - 3" ). See IRM 3.11.15.19.5

Audit Codes

  1. No more than 9 audit codes may be used at one time.

  2. Edit Audit Codes in the left margin next to Line 9 of Form 1065.

  3. Edit as "1 -" followed by the appropriate code(s).

  4. Edit Audit Code "1" if any of the following forms or conditions are present:

    1. Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR), is attached.

    2. Form 8275, Disclosure Statement, is attached or a statement referring specifically to IRC 6662 (Disclosure) or IRC 707 (Disguised Sale).

    3. Form 8275-R, Regulation Disclosure Statement, is attached.

    4. Form 8886, Reportable Transaction Disclosure Statement, is attached.

    5. Section 761(a) election that is selected for examination.

    6. Form 1065 contains the notation Disregarded Entity in the header or entity portion of the return (on Page 1, Form 1065 )

  5. Edit Audit Code "2" if any of the following forms and/or conditions are present:

    1. Form 1065, page 2, Schedule B, Box 1(e), Foreign Partnership is checked.

    2. Form 1065, page 3, Schedule B, Question 11 (Foreign Trust) is answered "YES" .

    3. Form 1065, page 3, Schedule B, Question 15 (Form 8858) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    4. Form 1065, page 3, Schedule B, Question 16 (Form 8805) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    5. Form 1065, page 3, Schedule B, Line 17 has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    6. Form 1065, page 4, Schedule K, Line 16(l) (Total Foreign Taxes) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    7. Form 1065-B, page 2, Schedule B, Question 1, Box (e) (Foreign Partnership) is checked.

    8. Form 1065-B, page 2, Schedule B, Question 3 (Multiple Partners) is answered "YES" .

    9. Form 1065-B, page 2, Schedule B, Question 4 (Foreign Partners) is answered "YES" .

    10. Form 1065-B, page 2, Schedule B, Question 8 (Foreign Trust) is answered "YES" .

    11. Form 1065-B, page 2, Schedule B, Question 9 (Foreign Disregarded Entity) has an entry greater than 0 (zero).

    12. Form 5471, Information Return with Respect to a Foreign Corporation, is attached.

    13. Form 5472, Information Return of a Foreign Owned Corporation, is attached.

    14. Form 5713, International Boycott Report, is attached and both questions in 7(f) are answered "YES" .

    15. Form 8621, Return by a Shareholder of a Passive Foreign Investment Co. or Qualified Electing Fund, is present and Part V Line 15a-16f has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . For prior year revision (2011 and prior) check Part IV, Line 10a - 11f.

    16. Form 8804, Annual Return for Partnership Withholding Tax (Section 1446), is attached.

    17. Form 8805, Foreign Partners Information Statement of Section 1446 Withholding, is attached.

    18. Form 8813, Partnership Withholding Tax Payment, is attached.

    19. Form 8832, Entity Classification Election, is attached and box 6(d), 6(e) or 6(f) is checked.

    20. Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), is attached.

    21. Form 8858, Information Return of U.S. Persons With Respect to Disregarded Entities, is attached.

    22. Form 8865, Information Return of U.S. Persons With Respect to Certain Partnerships, is attached.

  6. Edit Audit Code"3" if the following condition is present:

    1. Form 1065, Page 4, Schedule K, Lines 19a or 19b has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  7. Edit Audit Code "4" if the following condition is present:

    1. Form 1065, Page 4, Schedule K, Line 9c ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ andForm 1065, Page 4, Schedule K, Line 10 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    2. Form 1065, Schedule B, Question 2 (Dual Partner Code) is present and the YES box is checked.

  8. Edit Audit Code "5" if any of the following forms and/or conditions are present:

    1. Form 8283, Noncash Charitable Contributions, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ For prior year forms, See IRM 3.11.15.4.1.

    2. Form 8283, Noncash Charitable Contributions, is attached and Page 2, Part I, Question 5, Column (c) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . For prior year forms, See IRM 3.11.15.4.1.

    3. Form 8594 is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    4. Form 8883, Asset Allocation Statement Under Section 338, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  9. Edit Audit Code "6" if Form 3115, Application for Change in Accounting Method, is attached.

  10. Edit Audit Code "7" if any of the following forms and/or conditions are present:

    1. Form 1065, page 3, Schedule B, Question 12a is answered "YES" . (Question 7 on Form 1065-B).

    2. Form 1065, page 4, Schedule K, Line 16(l) (Total foreign taxes) is less ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    3. Form 5713, International Boycott Report, is attached and either one or both questions in 7(f) are not answered "YES."

    4. Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualifying Electing Fund, is attached and Part V Line 15a-16f has an entry of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . For prior year revision (2011 and prior) check Part IV, Line 10a - 11f.

  11. Edit Audit Code "8" if Schedule M-3, Net Income (Loss) Reconciliation for Certain Partnerships, is attached.

    Caution:

    All returns with a Schedule M-3 attached must be sent to Ogden for processing.

  12. Edit Audit Code "9" if Form 1065 or Form 1065-B, page 5, Schedule M-2, Line 6b (Property Distribution) has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

Special Income Code

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. If present, edit Code "2 - 1" in the left margin next to Line 9 of Form 1065.

♦Installment Sale Indicator ♦

  1. Form 6252, Installment Sale Income, is used to report the sale of property on the installment plan.

  2. Codes are based solely on the partnership response to Question 3 on Form 6252. See Figure 3.11.15-27 below.

  3. Edit the Installment Sale Indicator in the left margin next to Line 9 of Form 1065.

  4. Edit as "3 -" followed by the appropriate Installment Sale Indicator Code.

  5. Valid codes for Installment Sale Indicator are as follows:

    Code One Form 6252 Multiple Forms 6252
    1 "YES" response to Question 3, At least one form has a "YES" response.
    2 "NO" response to Question 3, All "NO" responses, or a combination of "NO" and/or blank responses.
    3 "YES" and "NO" are checked or Question 3 is blank, Question 3 is blank on all forms.

    Figure 3.11.15-27

    This is an Image: 33495028.gif
     

    Please click here for the text description of the image.

Nonrecourse Loan Code

  1. Edit a "4 - 1" in the left margin next to Line 9 of Form 1065 for the Nonrecourse Loan Code in the following instances:

    1. If there is an entry other than zero on Schedule L, Line 18, Columns (b) or (d) on Form 1065.

      Note:

      Do not edit a "1" if a nonrecourse loan is shown on a Schedule L that has been deleted.

    2. If Schedule K-1 (Form 1065), Question K, Nonrecourse, contains an entry other than zero or shows a percent figure or provides indication of any activity (all, half, prorated) rather than a dollar amount, treat the entry as if it is a dollar amount and code accordingly. (If the volume is greater than 20, sample at least 20 Schedules K-1). See Figure 3.11.15-28 below.

      Caution:

      Do not edit the amount from the Qualified Nonrecourse Financing line.

    3. If Schedule K-1 is for a tax year prior to 2004, edit a "1" if there is an entry other than zero on the first line under Question f (Nonrecourse).

    4. If an attachment indicates a nonrecourse loan.

  2. In all other instances, leave blank.

    Figure 3.11.15-28

    This is an Image: 33495029.gif
     

    Please click here for the text description of the image.

Historic Structure Code

  1. Edit a Code "6 - 3" in the left margin next to Line 9 of Form 1065 if the tax period is 8312 and later, Form 3468, Investment Credit, is attached, and there is an entry present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on the credit side of any of the following lines:

    1. Tax Year 2016 and subsequent - Code "3" if an amount is present on Form 3468, Part lll, Line 11 (Rehabilitation Credit); specifically Lines e and f.

    2. Tax Year 2010 to 2015 - Code "3" if an amount is present on Form 3468, Part lll, Line 11 (Rehabilitation Credit); specifically Lines e, f, g, h, i, or j.

    3. Tax Year 2008 and 2009 - Code "3" if an amount is present on Form 3468, Part III, Line 10 (Rehabilitation Credit); specifically, Lines e, f, g, h, i, or j.

    4. Tax Years 2006 and 2007 - Code "3" if an amount is present on Form 3468, Line 1 (Rehabilitation Credit); specifically, Line e, f, g, or h.

    5. Tax Years 1996 to 2005 - Code "3" if an amount is present on Form 3468, Part I, Line 1 (Rehabilitation Credit); specifically, Line b or c.

Tax Data Perfection

  1. The following information will enable you to perfect tax data.

  2. Edit the following line items per these guidelines:

    1. Edit all monetary amounts as dollars only.

      Exception:

      The 3.5% tax on Form 1065 (edited - in the margin to the right of Line 22 (Ordinary Business Income (loss)) must be dollars and cents. (See IRM 3.11.15.22.15)

    2. Do not edit a vertical line, 00, dash or decimal point in a dollars and cents field when the partnership has entered dollars only.

    3. On monetary amounts with a decimal point present, do not edit unless otherwise specified.

    4. If any of the transcribed tax data lines are missing, compute the correct entry from available figures on the return or attachments. If entry cannot be determined, leave blank.

    5. Any misplaced entries must be moved to the appropriate line. The entry on the incorrect line must be deleted.

    6. If the correct line for the misplaced entry cannot be determined, move to the "Other" line.

Form 1065, Income Section (Lines 1- 8)

  1. This section provides instructions for editing Lines 1a through 8 of Form 1065.

  2. Do not bracket any entry, unless editing or computing a negative amount.

  3. Perfect all illegible or misplaced entries (when possible).

  4. Delete misplaced entries and edit to the appropriate lines.

    If... Then...
    The partnership indicates missing entries are supported by schedules or there are missing entries on Lines 1a through 8,
    1. Check the schedules and edit TOTAL figures to Lines 7 and 8 of Form 1065.

    2. If no schedule(s) attached, leave corresponding entries blank.

    Lines 1a through 8 are missing and cannot be determined from an attachment, Combine Lines 21 and 22 (if present) and edit the amount to Lines 7 and 8 of Form 1065.

Line 1 - Gross Receipts or Sales

  1. For TY2017Form 1065 the amount for:

    • "Gross Receipts or Sales" is claimed on Line 1a.

    • "Returns and Allowances" is claimed on Line 1b.

  2. Edit Lines 1a and 1b as follows:

    If... And... Then...
    Line 1a is blank, Amount is present on Line 1b, Edit the amount on Line 1a from the sum of Lines 1b and Line 1c.
    Line 1a is blank, Amount is not present on Line 1b, Edit the amount from Line 1c on Line 1a.
    Line 1b is blank, Amount is present on Line 1a and the amount on Line 1c is less than Line 1a, Edit the difference between Line 1a and Line 1c on Line 1b.
    Line 1b is blank Amount is present on Line 1a and no amount is present on Line 1c, If Line 3 is present, then compute and edit the amount on Line 1b (Line 3 plus Line 2 minus Line 1a).

    Note:

    If no amount is present on Line 2 See IRM 3.11.15.21.2 paragraph (2).

TY2011 Conversion of Form 1065 Lines 1a though 1e
  1. For TY2011Form 1065 version the amounts for:

    • "Gross Receipts or Sales" is claimed on Line 1b. as "Gross Receipts or Sales not reported on Line 1a" .

    • "Returns and Allowances" is claimed on Line 1d as "Returns and Allowances plus any other adjustment to Line 1a" .

  2. If significant amounts are present on Lines 1a through 1e of Form 1065, process as follows:

    1. Line through the line numbers 1a through 1e.

    2. Change Line 1c to 1a and 1d to 1b.

    3. See IRM 3.11.15.21.1(2) if converted Lines 1a and 1b need to be computed.

      Note:

      2011 revision Form 1065, Line 1e is the equivalent revision Line 1c; although it is not a transcription line, it may be necessary to use this line to compute Lines 1a or 1b.

TY2010 and Prior Year Conversion of Form 1065 Lines 1a and 1b
  1. For TY2010 and priorForm 1065 version the amounts for:

    • "Gross Receipts or Sales" is claimed on Line 1a.

    • "Returns and Allowances" is claimed on Line 1b as "Less Returns and Allowances" .

    1. Take no action and continue editing the return.

Line 2 - Cost of Goods Sold (Form 1125-A)

  1. Cost of goods sold is reported on Line 2 of Form 1065.

  2. If Line 2 is blank, edit from Form 1125-A, Line 8 (IMPORTANT: 2010 and prior revisions - this information was entered from Schedule A (Form 1065), Line 8). Bracket if necessary

    If... And... Then...
    Line 2 is blank, There is an entry on Line 8, Form 1125-A, Edit amount from Line 8, Form 1125-A to Line 2 of Form 1065.
    Line 2 is blank, Line 8 (Form 1125-A) is also blank, Subtract Line 7 from Line 6 on Form 1125-A and edit to Line 2 of Form 1065.
    Line 2 is blank, Lines 7 and 8 (Form 1125-A) are blank, Edit the amount from Line 6 (Form 1125-A) to Line 2 of Form 1065.
    If Line 2 is present Form 1125-A is not attached, Dummy Form 1125-A.
  3. See IRM 3.11.15.32, Form 1125-A, Cost of Goods Sold (previously Form 1065, Schedule A), for "dummy return" preparation procedures.

Line 3 - Gross Profit (Loss)

  1. Line 3, Gross Profit, should be the amount calculated by subtracting Line 2 from Line 1c.

  2. Though Line 3 is not a T-line, it may be necessary to compute this line in the following instances:

    If... Then...
    Line 3 is blank, Compute only if needed to compute Line 8 (Total income) amount.
    Line 3 contains an entry, Accept the partnership entry. Use the partnership entry, if needed, to compute Line 8 (Total income) amount.

Line 4 - Ordinary Income (Loss) from Other Partnerships and Fiduciaries

  1. Ordinary income or loss from other partnerships and fiduciaries is reported on Line 4 of Form 1065.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Line 5 - Net Farm Profit (Loss)

  1. The net profit or loss from farming is reported on Line 5 of Form 1065.

  2. This entry is supported by Schedule F (Form 1040), Profit or Loss From Farming, or an attached schedule.

    1. If Line 5 is blank, edit the Net Farm Income or Loss from Schedule F (Form 1040), Line 34 or attached schedule.

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. See IRM 3.11.15.29, Schedule F - Profit or Loss From Farming for Schedule F editing procedures.

Line 6 - Net Gain (Loss)

  1. The net gain or loss on the sale of property used in a trade or business shown on Line 17 of Form 4797, Sale of Business Property is reported on Line 6 of Form 1065.

    If... Then...
    Line 17 of Form 4797 includes the amount from Line 7 of Form 4797 (amount shown on Line 11 or 12 of Form 4797),
    1. Adjust Line 17 to delete the Line 7 amount.

    2. Edit the corrected amount from Line 17 to Line 6 of Form 1065.

    3. Edit Line 7 of Form 4797 to Line 10 of Schedule K.

    4. Continue editing the return.

    There is an entry on Line 17 of Form 4797 and the amount is not reported on either:
    • Line 3c of Schedule K, or

    • Line 19 of Form 8825 or on an attachment to Form 8825,

    1. Edit Line 17 amount to blank Line 6 of Form 1065.

    2. Continue editing the return.

    There is an entry on Line 17 of Form 4797 and the amount is reported on either:
    • Line 3c of Schedule K, or

    • Line 19 of Form 8825 or on an attachment to Form 8825,

      Note:

      If shown on Form 8825 or attachment, the amount will be included on Line 2 of Schedule K.

    1. Do not edit the amount to Line 6 of Form 1065.

    2. Continue editing the return.

  2. See IRM 3.11.15.24.1, Line 2, Schedule K for additional editing procedures.

Line 7 - Other Income (Loss)

  1. Other income or loss not shown on lines 1a through 6 is reported on Line 7 of Form 1065.

  2. An amount on Line 7 may be supported by an attached statement.

    If... Then...
    A statement is not attached, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .
    The attachment shows the type of income to be the same as that reported on any Line 1a through 6, Decrease the Line 7 amount by that amount and increase the appropriate income line (Lines 1a through 6).
    Line 7 is blank or illegible and "Other Income" is reported on an attachment to Form 1065, Determine if the amount has been reported elsewhere on the return, if unable to determine, edit the amount to Line 7 of Form 1065.
  3. Line 7 may include an amount from Form 6478 (Alcohol and Cellulosic Biofuel Fuels Credit). If Form 6478 is attached with a significant amount on *Line 5(c) or Line 8, edit Action Code "343" .

    Note:

    *Line 5(c) or Line 7 on 2009 Form 6478. Line 7(c) or Line 9 on 2008 Form 6478. These instructions apply to Tax Year 2009 only, including fiscal year (200901 through 201011). Do not edit AC 343 for Tax Period 201012.

Line 8 - Total Income (Loss)

  1. The total income or loss (sum of Lines 3 through 7) is reported on Line 8 of Form 1065.

    If... Then...
    There is an amount present for Total Income on Line 8 but the amount is not identified on Lines 1a through 7 and/or attachments, Edit the Line 8 amount to Line 7 of Form 1065.
    Line 8 is blank but there are significant entries on Lines 1a through 7, Compute and edit Line 8 of Form 1065.

Form 1065, Deductions Section (Lines 9-22)

  1. This section provides instructions for editing Line 9 through 22 on Form 1065.

  2. Do not bracket any entry, unless editing or computing a negative amount.

  3. Perfect all illegible or misplaced entries (when possible).

  4. Delete misplaced entries and edit to the appropriate lines.

  5. "X" any negative amount on Line 9, 10, 13, 14, or 15, and include in the calculation for Line 20, "Other Deductions" .

Line 9 - Salaries and Wages

  1. The salaries and wages paid during the year are reported on Line 9 of Form 1065.

  2. Entry must be positive.

    Reminder:

    Edit Salary and Wage Code "1" if an entry greater than zero is present on Line 9. IRM 3.11.15.17, Salary and Wage Code.

Line 10 - Guaranteed Payments to Partners

  1. Payments made to partners for services or for the use of capital is reported on Line 10 of Form 1065.

  2. Entry must be positive.

  3. Accept the partnership entry.

Line 11 - Repairs and Maintenance

  1. The cost of incidental repairs and maintenance that do not add to the value of the property or prolong its life is reported on Line 11 of Form 1065.

  2. Accept the partnership entry.

Line 12 - Bad Debts

  1. Total debts that became worthless during the year is reported as bad debts on Line 12 of Form 1065.

  2. Accept the partnership entry.

Line 13 - Rent

  1. The rent paid on business property used by the partnership is reported on Line 13 of Form 1065.

  2. Entry must be positive.

  3. Accept the partnership entry.

Line 14 - Taxes and Licenses

  1. Taxes and licenses paid by the partnership are reported on Line 14 of Form 1065.

  2. Entry must be positive.

  3. Accept the partnership entry.

Line 15 - Interest

  1. Interest paid by the partnership is reported on Line 15 of Form 1065.

  2. Entry must be positive.

  3. Accept the partnership entry.

Line 16c - Depreciation

  1. The depreciation claimed on the partnership assets is reported on Lines 16a through 16c.

    If... And... Then...
    Lines 16a and 16c are blank, There is an entry on Line 16b, Arrow Line 16b to Line 16c.
    Lines 16b and 16c are blank, There is an entry on Line 16a, Arrow Line 16a to Line 16c on Form 1065.
    Line 16c is blank, There are entries on Lines 16a and 16b, Subtract Line 16b from Line 16a and edit the result to Line 16c of Form 1065.

Line 17 - Depletion

  1. The partnership reports a deduction for depletion on Line 17 of Form 1065.

  2. Accept the partnership entry.

Line 18 - Retirement Plans, etc.

  1. Partnership contributions to a qualified pension, profit-sharing, annuity or IRA plan is reported on Line 18 of Form 1065. (See IRM 3.11.15.18)

    Reminder:

    Edit the EPMF Code"1" if an entry greater than zero (+/-) is present on Line 18. See IRM 3.11.15.18, EPMF Code.

  2. Accept the partnership entry.

Line 19 - Employee Benefit Programs

  1. Partnership contributions to employee benefit programs (e.g., insurance, health and welfare programs) is reported on Line 19 of Form 1065.

  2. Accept the partnership entry.

Line 20 - Other Deductions

  1. The total allowable deductions not deducted elsewhere on page 1 is reported on Line 20 of Form 1065.

    Reminder:

    "X" any negative amount on Line 9, 10, 13, 14, or 15, and include in the calculation for Line 20, "Other Deductions" .

  2. An entry on Line 20 may be supported by an attached statement.

    If... And... Then...
    A statement is not attached There is an entry on Line 20, Accept the partnership entry.
    A statement is attached Lines 9 through 19 are blank, Enter the deductions to the appropriate lines.

    Note:

    Coding and Editing Partnership Returns, Form 1065 Job Aid (Number 2505-002) provides examples for editing deductions from attachments.

    A statement is attached There are entries on Line 9 through 19, Accept the partnership entry on Line 20.
    Line 20 is blank or illegible Other Deductions are reported on an attachment to Form 1065, Determine and edit the Line 20 amount.

Line 21 - Total Deductions

  1. The total deductions (sum of Line 9 through 20) is reported on Line 21 of Form 1065.

    If... Then...
    There is an entry present for Total Deductions on Line 21 but the amount is not identified on Lines 9 through 20, Edit the Line 21 amount to Line 20 of Form 1065.
    Line 21 is blank but there are significant entries on Lines 9 through 20, Compute and edit Line 21 of Form 1065.

Line 22 - Ordinary Business Income (Loss)

  1. Ordinary business income or loss is derived by subtracting Line 21 (Total Deductions) from Line 8 (Total Income (loss)) and reported on Line 22 of Form 1065.

    If... And... Then...
    Line 22 is present, Lines 1 through 21 are blank and cannot be determined from attachments, Edit the Line 22 amount to Line 7 (Other Income (loss)) and 8 (Total Income (loss)).
    Line 22 is blank, There are significant entries on Lines 8 and 21, Subtract Line 21 from Line 8 and edit to Line 22 of Form 1065.
    Lines 22 and 21 are blank, There is a significant entry on Line 8, Edit the Line 8 amount to Line 22 of Form 1065.
    Lines 22 and 8 are blank, There is a significant entry on Line 21 (Total Deductions), Edit the Line 21 amount to Line 22 of Form 1065.

Publicly Traded Partnership

  1. The right margin next to Line 22 is also used by several partnerships that have elected to retain their partnership status but must pay a 3.5% tax on all or part of their income (See IRM 3.11.15.15.13, CCC ""X" " - Publicly Traded Partnerships).

Qualifying Therapeutic Discovery Project (QTDP)

  1. The right margin near Line 22 is also used by certain partnership to recapture Qualified Therapeutic Discovery Project (QTDP). The partnership will repay the unused credit by filing Form 4255, Recapture of Investment Credit, along with the Form 1065 return. These returns are identified by:

    • Form 4255, Recapture of Investment Credit, attached to Form 1065.

    • "QTDP" or Qualifying Therapeutic Discovery Project marked on Form 1065 with an amount in the margin near Line 22. (See procedures in (4) below).

      Note:

      If the Form 4255 is attached, it may be used for recapture of investment credits other than ONLY the QTDP. Follow instructions in (2) below to process QTDP returns.

  2. Process these returns as follows:

    1. Verify EIN and name on return with Form 4255.

    2. Edit CCC "X" on Form 1065.

    3. Edit Audit trail and photocopy Page 1 of the return and Form 4255.

    4. Route photocopies of the return and the Form 4255 to Accounts Management.

    5. Continue processing Form 1065.

  3. Accept the partnership amount if there is an entry in the right margin next to Line 21 (Total Deductions).

Credit for Federal Telephone Excise Tax Paid (TETR)

  1. Edit Action Code "420" on any original Form 1065 if Form 8913, Credit for Federal Excise Tax Paid, is attached.

  2. Do not edit Action Code 420 on amended Form 1065.

  3. Sequence Form 8913 after Form 1125-A.

Schedule B, Pages 2 and 3, Other Information

  1. This section provides instructions for editing Other Information on Schedule B of Form 1065.

Type of Partnership Entity - (Question 1)

  1. The Type of Partnership Entity is based on the partnership response to Question 1, "What type of entity is filing this tax return?"

  2. Edit Audit Code "1-2" in the left margin next to Line 9 of Form 1065 if Box 1(e) is checked.

Dual Partner Code - (Question 2)

  1. The Dual Partner Code is based on the partnership answer to the question on Line 2, Schedule B Form 1065. "At any time during the tax year, was any partner in the partnership a disregarded entity, a partnership (including an entity treated as a partnership), a trust, and S corporation, an estate (other than an estate of a deceased partner), or a nominee or similar person?"

  2. The Dual Partner Code is edited as follows:

    If... Then...
    Schedule B is present and the "YES" box is checked,
    1. Enter Audit Code 1-4 to the left of line 9 of the Form 1065.

    2. Continue editing the return.

    Schedule B is present and both boxes are checked,
    1. Edit "3" in the right margin next to the checkbox.

    2. Enter Audit Code 1-4 to the left of line 9 of the Form 1065.

    3. Continue editing the return.

    Schedule B is present and neither box is checked,
    1. No editing is required.

    2. Continue editing the return.

Foreign or Domestic Corporate Ownership - (Question 3a)

  1. The Foreign or Domestic Corporate Ownership is based on the partnership answer to the question on Line 3a, Schedule B, Form 1065.

  2. The Foreign/Domestic Corporate Code is edited as follows:

    If... Then...
    Schedule B is present and the "YES" or "NO" box is checked,
    1. No editing required.

    2. Continue editing the return.

    Schedule B is present and both boxes are checked,
    1. Edit "3" next to the checkbox.

    2. Continue editing the return.

    Schedule B is present and neither box is checked,
    1. No editing is required.

    2. Continue editing the return.

  3. If Schedule B is not attached and the tax year is 1991 and subsequent, examine the return and attachments for Form 8865, Information Return of U.S. Persons With Respect to Certain Foreign Partnerships:

    If... Then...
    Form 8865 is attached,
    1. Create a dummy Schedule B (Page 2) and check the "YES" box for Question 3a.

    2. Continue editing the return.

Foreign Individual or Estate Ownership - (Question 3b)

  1. The Foreign Individual or Estate Ownership is based on the partnership answer to the question on Line 3b, Schedule B, Form 1065.

  2. Edit the Foreign Individual or Estate Ownership Code as follows:

    If... Then...
    Schedule B is present and the "YES" or "NO" box is checked,
    1. No editing required.

    2. Continue editing the return.

    Schedule B is present and both boxes are checked,
    1. Edit "3" next to the checkbox.

    2. Continue editing the return.

    Schedule B is present and neither box is checked,
    1. No editing is required.

    2. Continue editing the return.

Ownership of Foreign or Domestic Corporation Code - (Question 4a)

  1. The Ownership of Foreign or Domestic Corporation is based on the partnership answer to the question on Line 4a, Schedule B, Form 1065.

  2. Edit the Stock Ownership Code as follows:

    If... Then...
    Schedule B is present and the "YES" or "NO" box is checked,
    1. No editing required.

    2. Continue editing the return.

    Schedule B is present and both boxes are checked.
    1. Edit "3" next to the checkbox.

    2. Continue editing the return.

    Schedule B is present and neither box is checked,
    1. No editing is required.

    2. Continue editing the return.

Ownership of Foreign Partnership or Trust Code - (Question 4b)

  1. The Ownership of Foreign Partnership or Trust is based on the partnership answer to Line 4b, Schedule B, Form 1065.

  2. Edit the Ownership of Foreign Partnership or Trust Code as follows:

    If... Then...
    Schedule B is present and the "YES" or "NO" box is checked,
    1. No editing required.

    2. Continue editing the return.

    Schedule B is present and both boxes are checked,
    1. Edit "3" next to the checkbox.

    2. Continue editing the return.

    Schedule B is present and neither box is checked,
    1. No editing is required.

    2. Continue editing the return.

Partnership Level Tax Treatment Election - (Question 5)

  1. The Partnership Level Tax Treatment Election (Form 8893) is based on the partnership response to Question 5, Schedule B, Form 1065.

  2. No editing is required.

Balance and Reconciliation - (Question 6)

  1. The response to Question 6 on Schedule B ascertains the partnership requirement to complete and attach a balance sheet (Schedule L).

  2. See IRM 3.11.15.27 for editing procedures.

Distribution From Foreign Trust - (Question 11)

  1. The distribution from foreign trust is based on the partnership response to Question 11, Schedule B, Form 1065.

  2. Edit Audit Code "1 - 2" in the left margin next to Line 9 of Form 1065 if the "Yes" box is checked.

Distribution of Property Code - (Question 12a)

  1. The distribution of property code is based on the partnership response to Question 12a, Schedule B, Form 1065.

    If... Then...
    Schedule B is present and the "YES" box is checked,
    1. Edit Audit Code 7 in the left margin on page 1 next to Line 9. See IRM 3.11.15.19.1.

    2. Continue editing the return.

    Schedule B is present and both boxes are checked,
    1. Edit "3" next to the checkbox.

    2. Edit Audit Code 7 in the left margin on page 1 next to Line 9. See IRM 3.11.15.19.1

    3. Continue editing the return.

    Schedule B is present and the "NO" box or neither box is checked,
    1. No editing is required.

    2. Continue editing the return.

Number of Forms 8858 Attached - (Question 15)

  1. The Number of Forms 8858 is based on the partnership entry on Question 15, Schedule B, Form 1065.

  2. Edit Audit Code "1-2" in the left margin next to Line 9 of Form 1065 if there is an entry on Line 15 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. Accept partnership entry.

Number of Forms 8805 Attached - (Question 16)

  1. The Number of Forms 8805 attached is based on the partnership entry on Question 16, Schedule B, Form 1065.

  2. Edit Audit Code "1-2" in the left margin next to Line 9 of Form 1065 if the entry on Line 16 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. Accept the partnership entry.

Number of Forms 8865 Attached - (Question 17)

  1. The Number of Forms 8865 attached is based on the partnership entry on Question 17, Schedule B, Form 1065.

  2. Edit Audit Code "1-2" in the left margin next to Line 9 of Form 1065 if the entry on line 17 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . See IRM 3.11.15.19.1.

  3. Accept the partnership entry.

Number of Form 5471, Information Return of U. S. Persons With Respect to Certain Foreign Corporations, attached to this return (Question 19)

  1. This entry is based on the number of Forms 5471 attached shown on Question 19, Schedule B, Form 1065. (

  2. Edit the number of Forms 5471, Information Return of U. S. Persons With Respect to Certain Foreign Corporations, attached to this return as follows:

    If ... And ... Then ...
    The number of Forms 5471 is incorrect,   Circle out the incorrect entry and edit the correct number of Forms 5471 attached on Line 19.
    An entry greater than zero is present, There are no Forms 5471 attached, Circle out the entry.
    Schedule B, Question 19 is blank, Forms 5471 are attached, Edit the number of Forms 5471 on Line 19.
    Schedule B, Page 3 is not present, Forms 5471 are attached, Dummy Form 1065, Schedule B, Page 3.

Form 8938 - Statement of Specified Foreign Financial Assets (Question 22)

  1. For Tax Year (TY) 2016 and later, Form 8938, Statement of Specified Foreign Financial Assets will be transcribed into the General Purpose Program (GPP) database.

  2. Process Form 8938 with the following criteria:

    1. Tax Period on Form 1065 is 201601 or later and,

    2. Form 8938 is a current year revision and,

      Note:

      The GPP database can only process current year revisions of Form 8938.

    3. Form 8938 has significant entries.

  3. If Form 8938 is attached, but does not meet the above criteria, edit CCC "2" and continue normal processing of the Form 1065. Do not sequence the form to the back of the return, or place the form in a designated basket.

  4. If Form 8938 is attached and meets the criteria in paragraph (2), process Form 8938 per the instructions below:

    1. Completely edit Form 1065.

    2. Edit CCC "2" .

    3. Detach Schedules K-1.

    4. Pull the Form 8938 from the return and sequence to the back of the last page of Form 1065 (after schedules and attachment pages), attaching the Form 8938 so that it is back- to- back with the parent return.

    5. Place the Form 1065 in a designated basket.

    6. Only one Form 8938, Pages 1 and 2, can be processed. If multiple Forms 8938 are attached, select the form that has the highest account value in Part V, Line 4; or highest asset value in Part VI, Line 4 and delete the others.

      Note:

      The Form 8938 can have multiple "Continuation Statements" . Do not confuse the multiple continuation statements with multiple Forms 8938.

  5. Form 1065 with Form 8938 attached must be batched separately. The transcription of Form 8938 will occur under Program Code 43300 after the parent Form 1065 has been transcribed using normal procedures.

Schedule K, Form 1065

  1. Schedule K (page 4), Form 1065 reports the Partners' Distributive Share Items.

  2. Use the following instructions for missing Schedule K for tax periods ending 8712 and later:

    If... And... Then...
    Schedule K is missing or blank, Schedule D, Form 4797, and/or Form 8825 are attached, Perfect or dummy Schedule K by editing information from the attachment(s) to the appropriate Schedule K lines.

    Note:

    See IRM 3.11.15.2 for General Editing Procedures.

    Schedule K is missing or incomplete, The Schedule K-1 attached reports only Ordinary Income or no income, Do not correspond.
    Schedule K is missing or blank and cannot be perfected or dummied from attachments, The return is not a Final or Short Record return, (See IRM 3.11.15.5.6) Correspond using Letter 1355C when the partnership is required to complete and file Schedule K.

Line 2, Schedule K

  1. The partnership reports Net Rental Real Estate income or loss on Line 2 of Schedule K.

  2. Form 8825 is used to report Rental Real Estate income on Line 2 of Schedule K.

  3. If there is an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Schedule K, Line 2 then Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, must be attached.

    Exception:

    Form 8825 is not required on a "Final" or Short Record return.

  4. Edit Schedule K, Line 2 and Form 8825 as follows:

    If... And... Then...
    Schedule K, Line 2 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Multiple Forms 8825 are attached,
    1. Combine Line 18a (Line 17 on 2009 or prior) from all Forms 8825 and edit the resulting amount on Line 18a (Line 17 on 2009 or prior) of the first Form 8825.

    2. Combine Line 21 from all Forms 8825 and edit the resulting amount on Line 21 of the first Form 8825.

    3. "X" remaining Forms 8825.

    4. Continue editing per instructions below.

    Schedule K, Line 2 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8825, Line 21 agrees with Schedule K, Line 2,
    1. No action required.

    2. Continue editing the return.

    Schedule K, Line 2 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8825, Line 21 is smaller than the amount on Schedule K, Line 2,
    1. No action required.

    2. Continue editing the return.

    Schedule K, Line 2 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8825, Line 21 is greater than the amount on Schedule K, Line 2,
    1. Edit the amount from Form 8825, Line 21 to Schedule K, Line 2.

    2. Continue editing the return.

    Schedule K, Line 2 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8825 is not attached,
    • Correspond with the partnership to request Form 8825 using Letter 1355C or other approved local correspondence procedure.

      Note:

      Notate the letter sent in the bottom right margin of Form 1065.

    • Also correspond for missing or incomplete Schedules K-1 and number of partners, if relevant.

      Exception:

      If the partnership attaches a statement in lieu of Form 8825, prepare Form 8825 and attach to the return.

    Schedule K, Line 2 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Schedule E is attached,
    1. Correspond with the partnership to request Form 8825 using Letter 1355-C.

    Exception:

    Do not correspond on a Final return. Edit Line 26, Schedule E to Line 2, Schedule K.

    The amount on Line 21 of Form 8825 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Line 2, Schedule K is blank,
    1. Edit the amount from Form 8825, Line 21, to Schedule K, Line 2, See Figure 3.11.15-29 below.

    2. Continue editing the return.

    The amount on Line 21 Form 8825 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ more, The same income is shown on page 1 for Form 1065.
    1. "X" amounts shown on page 1, Form 1065.

    2. Edit Form 8825, Line 21, to Schedule K, Line 2.

    Form 8825, Line 18a (Line 17 on 2009 or prior) is negative,  
    1. "X" the negative amount.

    2. Continue editing the return.

    Form 8825, Line 18a (Line 17 on 2009 or prior) is blank,  
    1. Compute Line 18a (Line 17 on 2009 or prior) by adding gross rents, Line 2, Columns A through H.

    2. Edit the combined total to Form 8825, Line 18a (Line 17 on 2009 or prior).

    Form 8825, Line 21 is blank,  
    1. Compute Line 21 by combining Lines 18a (Line 17 on 2009 or prior) through Line 20a.

    2. Edit the computed Line 21 amount to Schedule K, Line 2.

    3. Continue editing the return.

    The partnership replies,  
    1. Edit the return using the information provided.

    2. Continue editing the return.

    Figure 3.11.15-29

    This is an Image: 33495031.gif
     

    Please click here for the text description of the image.

Line 3a, Schedule K

  1. The partnership reports other Gross Rental income or loss on Line 3a of Schedule K.

    Caution:

    The partnership may report a gain or loss from the sale/exchange or involuntary conversion of an asset used in rental activity other than a Rental Real Estate activity from Line 17 of Form 4797 on Line 3c of Schedule K. If the amount from Line 17 of Form 4797 is included in Line 3c of Schedule K or Line 19 of Form 8825, do not edit the amount to Line 6 of Form 1065.

  2. Accept the partnership entry.

Line 3c, Schedule K

  1. The partnership reports other Net Rental income on Line 3c of Schedule K.

  2. Accept the partnership entry.

Line 5, Schedule K

  1. The partnership reports Interest Income on Line 5 of Schedule K.

  2. Accept the partnership entry.

Line 6a, Ordinary Dividends

  1. The partnership reports Ordinary Dividends on Line 6a of Schedule K.

  2. Accept the partnership entry.

Line 6b, Qualified Dividends

  1. The partnership reports Qualified Dividends on Line 6b of Schedule K.

  2. Accept the partnership entry.

Line 7, Schedule K

  1. The partnership reports Royalties on Line 7 of Schedule K.

    Caution:

    Oil or gas lease income is not the same as oil or gas royalties.

    Note:

    Oil or gas lease income is considered Rental Real Estate and the amount is edited to Line 2, Schedule K.

  2. Oil or gas royalties is edited to Line 7, Schedule K.

  3. If Form 8825 includes oil or gas Royalty Income, edit Form 8825 to exclude the income.

    1. Edit Royalty Income from Line 2, Form 8825 to Line 7, Schedule K.

    2. Subtract Royalty Income (Line 2, Form 8825) from Line 18a (Line 17 on 2009 or prior), Form 8825 and edit to the left of the entry.

    3. Subtract Royalty Expenses (Line 16, Form 8825) from Line 18b (Line 18 on 2009 or prior), Form 8825.

    4. Recompute total on Line 21, Form 8825 and edit to Line 2, Schedule K. See Figure 3.11.15-30 below.

    Figure 3.11.15-30

    This is an Image: 33495032.gif
     

    Please click here for the text description of the image.

Line 9a, Schedule K

  1. The partnership reports Net Long-Term Capital Gain or Loss on Line 9a of Schedule K.

    1. If Schedule D is attached and Line 9a of Schedule K is blank, edit the amount from Line 15, (Line 13 on Tax Year 2011; Line 11 on tax years 2008 and Prior) Schedule D to Line 9a of Schedule K.

    2. Check the top margin for the literals "LIKE-KIND EXCHANGE" , "RELATED PARTY EXCHANGE" or "RELATED PARTY LIKE-KIND EXCHANGE" .

      Reminder:

      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    If... Then...
    A literal is present on Schedule D, Check the return for Form 8824.
    Form 8824 is attached, Edit CCC "1" . See Figure 3.11.15-31
    Form 8824 is not attached, Correspond for Form 8824 using Form 3696 or other approved Correspondence Action Sheet. Edit Action Code 211 (See IRM 3.11.15.2.3, Action Codes).

    Figure 3.11.15-31

    This is an Image: 33495033.gif
     

    Please click here for the text description of the image.

Line 10, Schedule K

  1. The partnership reports the net Section 1231 gain or loss on Line 10 of Schedule K from Line 7 of Form 4797.

  2. Edit Line 10 of Schedule K as follows:

    If... Then...
    There is an entry on Line 7 of Form 4797 and Line 10 of Schedule K is blank,
    1. Edit the Line 7 amount to Line 10 of Schedule K. See Figure 3.11.15-32.

    2. Continue editing the return.

    The entry on Line 7 of Form 4797 is reported on either:
    • Line 6 of Form 1065, or

    • Line 3c of Schedule K,

    1. Edit the Line 7 amount to Line 10 of Schedule K.

    2. "X" the amount on Line 6 of Form 1065 or Line 3c of Schedule K.

    3. Continue editing the return.

    Multiple Forms 4797 are attached,
    1. Add all the Line 7 amounts together.

      Note:

      Disregard any Form 4797 annotated "ALT MIN TAX" , "ALTERNATIVE MINIMUM TAX" , or "AMT" , etc.

    2. Edit the computed amount to Line 10 of Schedule K.

    3. Continue editing the return.

    Multiple Forms 4797 are attached and the partnership reported Line 7 on either:
    • Line 6 of Form 1065, or

    • Line 3c of Schedule K,

    1. Add all the Line 7 amounts together.

      Note:

      Disregard any Form 4797 annotated "ALT MIN TAX" , "ALTERNATIVE MINIMUM TAX" , or "AMT" , etc.

    2. Edit the computed amount to Line 10 of Schedule K.

    3. "X" the amount on Line 6 of Form 1065 or Line 3c of Schedule K.

    4. Continue editing the return.

    The top margin of Form 4797 has the literals "LIKE-KIND EXCHANGE" , "RELATED PARTY EXCHANGE" , or "RELATED PARTY LIKE-KIND EXCHANGE" , See IRM 3.11.15.24.8, Line 9a, Schedule K, for more information on Like-Kind Exchanges (including Form 8824, Like-Kind Exchanges).

    Note:

    If the amount on Schedule D, Line 13 (Line 11 on tax year 2008 and prior) and Form 4797, Line 7 are the same, then edit the amount from Schedule D, Line 15 to Schedule K, Line 9a, and also edit the amount from Form 4797, Line 7 to Schedule K, Line 10.

    Figure 3.11.15-32

    This is an Image: 33495034.gif
     

    Please click here for the text description of the image.

Line 11, Schedule K

  1. The partnership reports Ordinary Income or Loss on Line 11 of Schedule K.

  2. Accept the partnership entry.

Line 15a, Schedule K

  1. The partnership reports Low-Income Housing Credit (Section 42(j)(5)) on Line 15a of Schedule K. For tax years 200512 and subsequent, partnerships are instructed to complete and attach:

    • Form 8586, Low-Income Housing Credit

    • Form 8609-A, Annual Statement for Low Income Housing Credit

      For tax years 200412 and prior, partnerships are instructed to complete and attach:

      • Form 8586, Low-Income Housing Credit

      • Form 8609, Low-Income Housing Credit Allocation Certification

      • Schedule A (Form 8609), Annual Statement

  2. Follow the procedures below for Line 15a, Schedule K, and Form 8586:

    If ... And ... Then ...
    Line 15a, Schedule K, entry is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ,   "X" to the left of the entry.
    Line 15a, Schedule K, entry is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8586 is not attached, Correspond for Form 8586 and Form 8609-A. (For 200412 or prior: Form 8586, Form 8609, and Schedule A (Form 8609).

    Exception:

    If Form 8825 is attached and Line 20a has a significant entry, then Form 8609-Adoes not have to be attached.

    Line 15a, Schedule K, entry is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Line 3 or Line 10, Form 8586, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , (Line 3 for 2005 or 2006. Lines 2, 3a, or 4 for 200412 or prior) Correspond for Form 8609-A if not attached. (For tax years 200412 or prior: Form 8609 and Schedule A (Form 8609) if not attached).

Line 15b, Schedule K

  1. The partnership reports other Low-Income Housing Credit on Line 15b of Schedule K. For tax years 200512 and subsequent, partnerships are instructed to complete and attach:

    • Form 8586, Low-Income Housing Credit

    • Form 8609-A, Annual Statement for Low Income Housing Credit

    For tax years 200412 and prior, partnerships are instructed to compete and attach:

    • Form 8586, Low-Income Housing Credit

    • Form 8609, Low-Income Housing Credit Allocation Certification

    • Schedule A (Form 8609), Annual Statement

  2. Follow the procedures below for Line 15b, Schedule K, and Form 8586:

    If ... And ... Then ...
    Line 15b, Schedule K, entry is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ,   "X" to the left of the entry.
    Line 15b, Schedule K, entry is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8586 is not attached, Correspond for Form 8586 and Form 8609-A, (For 200412 or prior: Form 8586, Form 8609, and Schedule A (Form 8609).

    Exception:

    If Form 8825 is attached and Line 20a has a significant entry, then Form 8609-A does not have to be attached.

    Line 15b, Schedule K, entry is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Line 3 or Line 10, Form 8586, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , (Line 3 for 2005 or 2006. Lines 2, 3a, or 4 for 200412 or prior). Correspond for Form 8609-A if not attached (For tax years 200412 or prior: Form 8609 and Schedule A (Form 8609) if not attached).

Line 15c, Schedule K

  1. The partnership reports qualified rehabilitation expenditures for rental real estate on Line 15c of Schedule K.

  2. Accept the partnership entry.

  3. "X" to the left of the entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

Line 15f, Schedule K

  1. No editing is required for Line 15f.

  2. Line 15f may contain an amount from Form 6478(Alcohol and Cellulosic Biofuel Fuels Credit). If Form 6478 is attached with a significant amount on *Line 5(c) or Line 8, edit Action Code "343" .

    Note:

    *Line 5(c) or Line 7 on 2009 Form 6478. Line 7(c) or Line 9 on 2008 Form 6478.

  3. IMPORTANT: Form 6478 has restrictions: these instructions apply to 2009 tax year only, including fiscal year filers (200901 through 201011). Do not edit AC 343 for Tax Period 201012 and subsequent.

Lines 16d to 16m, Schedule K

  1. The partnership reports Foreign Income, deductions and taxes on Lines 16d through 16m of Schedule K.

  2. Accept the partnership entry.

  3. Edit Audit Code 2 or 7 if there is an entry on Line 16(l) edit as follows:

    If... Then...
    The amount on Line 16(l) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Edit Audit Code 2.
    The amount on Line 16(l) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Edit Audit Code 7.

Lines 19a and 19b, Schedule K

  1. Edit Audit Code 3 if either Line 19a or 19b has an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

Schedule L, Page 5

  1. If there is an entry other than zero on Line 18(b) and/or 18(d), edit the Nonrecourse Loan Code of "4 - 1" in the left margin next to Line 9 of Form 1065.

  2. If Line 19b, Column (d), Mortgages, Notes and Bonds payable in one year or more, is blank, edit amount from Line 19b, Column (b) or from supporting documentation, if present.

  3. Correspond for Schedule L (if missing or blank) and the return does not meet any of the following conditions:

    1. Form 1065, Page 2, Schedule B, Question 6d is checked "YES" .

      Note:

      If both the "Yes" box and the "No" box are checked or neither box is checked and none of the conditions in this list are met, correspond.

    2. Page 1, Box "F" is "0" (zero), "-" (dash), "NONE" , "N/A" or some similar entry.

    3. Schedule L is crossed out or annotated "0" (zero), "NONE" , "N/A" or some similar entry.

    4. There is an indication of single entry bookkeeping (Box "F" is blank, the cash box on Line H is checked and there are no entries on Lines 1-22 on Form 1065, page 1).

    5. Final Return.

  4. If any of the conditions in (3) above are met, Schedule L is not required. Delete by "X" ing or slashing through the schedule. If Schedules M-1 and M-2 are present, also delete by "X" ing or slashing through the schedules.

    Caution:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    1. Do not edit Total Assets in Box "F" .

    2. Do not edit non-recourse loan from Schedule L.

    3. If Box "F" is the only transcription line (T-line) with an entry, Short Record the return.

  5. If the conditions in (3) above are not met, correspond for Schedule L using Letter 1355C.

Schedule M-2, Page 5

  1. If Line 6b is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in the margin to the left of Line 9 on page 1 of Form 1065.

  2. Line 9 on Schedule M-2, if blank, edit from Schedule L, Line 21, Column (d).

Schedule F - Profit or Loss From Farming

  1. If Schedule F or a substitute Schedule F is attached, edit (dollars only): Part I, Line 1c, "Sales of livestock and other resale items" .

  2. On the dotted portion to the left of Part I, Line 9, edit the amount you get by subtracting Line 1c from Line 9, Part I and bracket any negative amount. See Figure 3.11.15-33. Prior Year Returns: For prior-year returns, convert, using the Job Aid and edit with current-year instructions.

    Caution:

    Do not edit "0" (zero).

    If... Then...
    Line 1c is blank, Subtract Line 1b from Line 1a, and subtract the result from Line 9.
    Line 9 is blank,
    1. Compute Line 9 by adding Lines 1c through 8 (that is, 1c, 2, 3b, 4b, 5a, 5c, 6b, 6d, 7, and 8)

    2. Subtract Line 1c from Line 9, and

    3. Edit the amount to the left of Part 1, Line 9 (on the dotted portion).

      Reminder:

      For accrual basis taxpayers, edit Line 50, Part III, page 2, Schedule F to the left of Part 1, Line 9, Schedule F.

    Lines 1a through 1c are blank and Lines 2 through 9 contain entries, Arrow the amount on Line 9 to the dotted portion of Line 9.
  3. If multiple Schedules F are attached, combine transcription lines and edit on the first Schedule F. "X" the remaining Schedules F and move to the back of the return.

    Figure 3.11.15-33

    This is an Image: 33495035.gif
     

    Please click here for the text description of the image.

Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation

  1. Place Form 8825 immediately following Schedule F.

  2. Only Line 18a, Total Gross Rents (Line 17 on 2009 and prior), is edited and transcribed from Form 8825. Line 21 is reported on Schedule K, Line 2.

    Note:

    For 2009 and prior revisions of Form 8825, renumber Line 17 as 18a.

  3. See IRM 3.11.15.24.1, Line 2, Schedule K for Schedule K, Line 2 and Form 8825 editing procedures.

Schedule D (Form 1065) - Capital Gains and Losses

  1. Edit Schedule D as follows:

    If... Then...
    All of the following conditions apply:
    1. Form 1065 is for 201212 Tax Period or subsequent and

    2. The Schedule D is a 2012 or subsequent revision and

    3. Significant entries are present on one or more of the transcription lines.

      • Transcription lines for 2013 and subsequent are as follows: Part I, Line 1a, Column(s) d and e, Lines 1b-3, Column(s) d, e, and g, Part II Lines 8a, Column(s) d and e, Lines 8b-10, Column(s) d, e, and g, and Line 14.

      • Transcription lines for 2012 are as follows: Part I, Lines 1–3, Column(s) d and e, Part II, Lines 8–10, Column(s) d and e, and Line 14,

    1. Place Schedule D in sequence order.

    2. Edit Schedule D in dollars only.

    3. For 2012 revisions: X any negative transcription entries and change Line 1 to 1b and Line 8 to 8b.

    4. For 2013 revisions and subsequent: X any negative transcription entries, except Lines 1b(g), 2(g), 3(g), 8b(g), 9(g) and 10(g). These lines can be positive or negative.

    Criteria above is not met, Cross out or slash the Schedule D and move out of sequence if necessary.

Form 1125-A, Cost of Goods Sold (previously Form 1065, Schedule A)

  1. Place Form 1125-A in sequence order if entries are present on Lines 1, 2, 6, or 7. See IRM 3.11.15.2 for sequence order.

    Note:

    The line descriptions of the former Schedule A (Cost of Goods Sold) and the current Form 1125-A are basically identical. Tax Forms and Publications removed the Schedule A from Page 2 of the Form 1065 for Tax Year 2011 and issued it as the new, separate, Form 1125-A, (Cost of Goods Sold).

  2. Edit Form 1125-A in dollars only. "X" any negative transcription entries.

  3. Line 1 is "Inventory at Beginning of Year" . Accept partnership entry.

  4. Line 2 is "Purchases" . Accept partnership entry.

  5. Line 3 is "Cost of labor" . No specific editing is necessary, but an entry on this line is indicative of a "Salary and Wage Code" condition. See IRM 3.11.15.17 (Salary and Wage Code) for editing instructions.

    Note:

    For Tax Year 2010 and prior revisions, this information was located on Form 1065, Page 2, Schedule A, Line 3.

  6. Line 6 is "Total Cost of Goods" . If Line 6 is blank, do one of the following:

    1. Add Lines 1 through 5 and edit the total to Line 6, or

    2. Perfect from attachments if possible for a Line 6 total.

    3. Edit Line 6 from Page 1, Line 2 of Form 1065, if a positive amount.

  7. Line 7 is "Inventory at End of Year" . Accept partnership entry.

  8. Form 1125-A must be dummied if:

    1. An amount is present on Form 1065, Page 1, Line 2 and Form 1125-A is missing.

    2. Form 1125-A is missing and Lines 1, 2, 6, and/or 7 can be edited from attachments.

  9. Use instructions in (2) - (7) above to edit lines. Place Form 1125-A in sequence order.

    Note:

    See IRM 3.11.15.17 and edit the proper Salary and Wage Code.

  10. For 2010 and prior revisions with entries on Schedule A, Lines 1, 2, 6, and/or 7, edit amounts to appropriate Form 1125-A, Lines 1, 2, 6, and/or 7 and place Form 1125-A in sequence order.

    Note:

    See IRM 3.11.15.17 and edit the proper Salary and Wage Code.

Form 5884-B, New Hire Retention Credit

  1. Place Form 5884-B in sequence order if a significant entry is present on Line 10 or 11. IRM 3.11.15.2 for sequence order instructions.

Form 8941, Credit for Small Employer Health Insurance Premiums

  1. Place Form 8941 in sequence order if significant entries are present. IRM 3.11.15.2 for sequence order instructions for Form 1065 and attachments.

  2. Make sure the taxpayer entries on Lines 1, 2, 13, and/or 14 are whole numbers (i.e., 1, 2, 3, 4, etc.). If Lines 1, 2, 13, and/or 14 all contain whole numbers, do nothing.

  3. If Lines 1, 2, 13, and/or 14 contain decimals or were entered as other than whole numbers, do as follows:

    1. Mark an ""X" " to the left of the taxpayer's entry.

    2. Round the taxpayer's entry to the next lowest whole number.

    3. Edit the rounded result to the left of the "X" .

    4. If the result is less than one (1), round up to "1"

  4. For 2012 and 2013 - If a significant entry is present:

    1. Change Line 1a to Line 1

    2. Change Line 1b to Line B

  5. For 2011 - No change is necessary.

  6. For 2010 - If significant entries are present on Lines 16, 18, 21 or 23, do the following:

    1. Delete line numbers 16 and 18.

    2. Change Line 21 to 16.

    3. Change Line 23 to 18.

Electronic Filed Partnership Returns

  1. The option to file electronic returns was made available on March 15, 2000. However, effective with tax periods ending 12-31-2000, partnerships with more than 100 partners must file their partnership return electronically at Ogden IRS Campus.

  2. Forward Form 8453-B and/or Form 8453-PE to:

    Ogden IRS Campus

    ELF Processing Support Section

    OSC M/S 6052

    ARKA Monterey Park Bldg.

    1973 N. Rulon White Blvd.

    Ogden, UT 84404-5402

Form 1065-B, U.S. Return of Income for Electing Large Partnership - Ogden IRS Campus

  1. Form 1065-B, U.S. Return of Income for Electing Large Partnerships, was created as a result of the Tax Reform Act (TRA) of 1997 to reduce the burden for the partners and increase the IRS' ability to match income and deduction amounts reported to individual partners on their individual income tax returns.

    1. A partnership may elect to file Form 1065-B if the partnership has 100 or more partners during the preceding tax year.

    2. A partnership cannot make the election to file Form 1065-B for its first tax year.

  2. Due date for Form 1065-B is the 15th day of the 3rd month following the close of the taxable year. March 15 is the due date for calendar year returns.

  3. Processing Cycles:

    • 16-day (normal)

    • 6-day, 11-day during peak (prior year, delinquent current year, reinput, reprocessable)

    • 6-day (reclassification)

    • Maximum 25 work days

♦BMF Consistency♦

  1. The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Code and Edit processing IRMs.

  2. Topics for the BMF Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden and Paper Processing Branch BMF Code and Edit/ERS.

  3. BMF Consistency subsections are identified by a ♦ (diamond) before and after the title.

  4. Text in normal print is the common processes for BMF returns. The text in BOLD print is form specific and applies to this IRM only.

General Editing Guidelines for Form 1065-B

  1. See IRM 3.11.15.2 for general information that can be used when editing Form 1065-B returns.

  2. The proper presentation of income and deduction items for subsequent input to the Integrated and Remittance Processing System (ISRP) and computer processing is essential. Document Perfection is responsible for arranging the return in the following order:

    1. Form 1065-B, page 1

    2. Form 1065-B, page 2

    3. Form 1065-B, page 3 (Schedule D)

    4. Form 1065-B, page 4

    5. Form 1065-B, page 5

    6. Schedule F

    7. Form 8825

    8. Form 1125-A

    9. Form 8913

    10. Form 8941

    11. Form 5884-B

♦Edit Marks♦

  1. See IRM 3.11.15.2.2.

♦Action Codes♦

  1. See IRM 3.11.15.2.3, Action Codes.

Perfecting Unprocessable Documents

  1. See IRM 3.11.15.3.

♦Correspondence♦

  1. See IRM 3.11.15.3.1.

♦Use of Fax for Taxpayer Submissions♦
  1. See IRM 3.11.15.3.1.2.

Foreign Address Returns (International)

  1. See IRM 3.11.15.3.2.

♦Frivolous Returns and Claims♦

  1. See IRM 3.11.15.3.3.

Examination of Attachments

  1. See IRM 3.11.15.4.

♦Routing Guide for Attachments♦

  1. See IRM 3.11.15.4.1.

Special Conditions

  1. The following instructions reference special procedures.

♦Statute Returns♦

  1. See IRM 3.11.15.5.1.

♦Compliance Secured/Prepared Returns♦

  1. See IRM 3.11.15.5.3.

♦IRC 6020(b) – Prepared by Collection♦
  1. See IRM 3.11.15.5.3.1

♦Collection Secured♦
  1. See IRM 3.11.15.5.3.2.

♦Examination Prepared Returns♦
  1. See IRM 3.11.15.5.3.3.

♦Examination Secured♦
  1. See IRM 3.11.15.5.3.4.

♦Re-Entry Document Procedures♦

  1. See IRM 3.11.15.5.4.

Amended Returns

  1. See IRM 3.11.15.5.5, Amended Returns.

Short Record Returns

  1. This section provides instruction for editing Short Record returns.

  2. Short Record returns must be edited correctly to prevent erroneous assessment of any penalties.

  3. See IRM 3.11.15.5.6 for more information regarding Short Record returns.

Nominee Returns
  1. For Form 1065-B, edit "SR" in the top margin above the form number "1065-B" .

  2. See IRM 3.11.15.5.6.3.

Inactive Returns
  1. For Form 1065-B, edit "SR" in the top margin above the form number "1065-B" .

  2. See IRM 3.11.15.5.6.4.

♦Received Date♦

  1. See IRM 3.11.15.6, Received Date and Exhibit 3.11.15-3 when editing the Received Date on Form 1065-B.

♦Signature♦

  1. See IRM 3.11.15.7.

Paid Preparer Checkbox Indicator

  1. See IRM 3.11.15.7.1.

♦Paid Preparer Section♦

  1. See IRM 3.11.15.7.2.

♦Preparer PTIN♦
  1. See IRM 3.11.15.7.2.1.

♦Preparer EIN♦
  1. See IRM 3.11.15.7.2.2.

♦Preparer Phone Number♦

  1. See IRM 3.11.15.7.2.3.

Tax Period Ending

  1. See IRM 3.11.15.8.

Tax Period Beginning - Initial, Final, or Short Period Form 1065-B Return

  1. See IRM 3.11.15.8.2.

"Initial" Short Period Return

  1. A partnership cannot file an "Initial" return using Form 1065-B, even if it is for a full period, based on IRC 775(a)(1)(A). Complete all editing and follow the instructions below to convert an initial return filed on Form 1065-B to Form 1065.

    Note:

    Correspond with taxpayer. Inform taxpayer that all Initial returns must be Form 1065, not Form 1065-B. Also request all other missing information, including Schedules K-1.

  2. Edit Initial Return Code "2" to the left of Line G, Page 1.

  3. Edit the Tax Period Beginning on "Initial" return in MMDDYY format per IRM 3.11.15.8.2.

  4. Circle "B" in the form number.

  5. Income and Deductions - Edit the income and deduction Sections of Form 1065-B to the applicable lines on Form 1065.

    1. Dummy Form 1065 Schedule K and edit as follows:

      Edit From
      Form 1065-B ...
      Edit Amount To
      Form 1065...
      Line through line number 4 (Net income (loss) from rental real estate). Schedule K, Line 2.
      Line through line number 5 (Net income (loss) from other rental activities). Schedule K, Line 3c.
    2. Line through Form 1065-B line numbers 6 - 25 and renumber as follows (See Figure 3.11.15-34a ):

    Form 1065-B Convert to Form 1065
    Line 6 Line 4
    Line 7 Line 5
    Line 9 Line 6
    Line 10 Line 7
    Line 11 Line 8
    Line 12 Line 9
    Line 13 Line 10
    Line 14 Line 11
    Line 15 Line 12
    Line 16 Line 13
    Line 17 Line 14
    Line 18 Line 15
    Line 19c Line 16c
    Line 20 Line 17
    Line 21 Line 18
    Line 22 Line 19
    Line 23 Line 20
    Line 24 Line 21
    Line 25 Line 22
  6. Part ll, Taxable Income or Loss From Other Activities -"X" out Part II on page 2 and edit the income amounts from Part II of Form 1065-B to the following lines on the dummy Form 1065, Schedule K (See Figure 3.11.15-34b):

    Edit From
    Form 1065-B, Part ll...
    Edit To
    Form 1065, Schedule K...
    Line 1 (Interest) Line 5
    Line 2a (Ordinary dividends) Line 6a
    Line 3 (Gross royalties) Line 7
    Line 4, (Excess of net short-term capital gain over net long-term capital loss) Line 8
    Line 5, (Other income loss) Line 11
  7. Schedule B, Other Information - Line through Form 1065-B, Schedule B line numbers 3-9 and renumber as follows (See Figure 3.11.15-34b):

    Form 1065-B, Schedule B... Convert to Form 1065, Schedule B...
    Line 4 Line 16
    Line 5 Line 7
    Line 6 Line 9
    Line 7 Line 10
    Line 8 Line 11
    Line 9 Line 17
  8. Schedule K, Partners' Shares of Income, Credits, Deductions, etc., - Edit amounts on Form 1065-B, Schedule K to the following lines on the dummy Form 1065, Schedule K (See Figure 3.11.15-34c):

    Edit From Form 1065-B, Schedule K... Edit to Form 1065, Schedule K...
    Line 4b Line 9a
    Line 11 Line 15a
    Line 12 Line 15c
    Line 14d(1) Line 16d
    Line 14d(3) Line 16f
    Line 14e(1) Line 16g
    Line 14e(2) Line 16h
    Line 14f(1) Line 16i
    Line 14f(3) Line 16k
    Line 14g Line 16l (L)
    Line 14h Line 16m
  9. Sequence the dummy Form 1065 Schedule K after page 3 and before page 5.

  10. "X" and sequence Form 1065-B page 4 to the back of the return.

    Figure 3.11.15-34a

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    Please click here for the text description of the image.

    Figure 3.11.15-34b

    This is an Image: 33495037.gif
     

    Please click here for the text description of the image.

    Figure 3.11.15-34c

    This is an Image: 33495038.gif
     

    Please click here for the text description of the image.

"Final" Return

  1. Identify a "Final" return by any of the following:

    1. The "Final return box " is checked.

    2. The return or attachments indicates "FINAL" , "OUT OF BUSINESS" , "NO LONGER LIABLE" , etc.

    3. Partnership cites IRC 708(b)(1)(B).

  2. A "Final" Short Period return ends on the date the partnership went out of business. This may be any day of the month. Use the numeric designation of the calendar month in which it ended. If the partnership does not indicate the month the business ended, edit the tax period ending as one month prior to the return received date.

  3. Edit CCC "F" to the center of Lines 1 and 2 of the return.

  4. Edit the Tax Period Beginning in MMDDYY format per IRM 3.11.15.8.2.

  5. If partnership files both an "Initial" and "Final" Short Period return using one EIN and together covers no more than one 12 month or 52-53 week period and both returns are received together for editing, do the following:

    • Combine both returns into one return.

    • Combine money amounts from transcription lines.

    • If conflicting information is present (i.e., Number of Partners, Business Code etc.), use the information from the Final or latest return.

    • Process the combined return.

    Reminder:

    Partnership cannot file an Initial Form 1065-B. Form must be converted to Form 1065.

Change in Accounting Period

  1. See IRM 3.11.15.8.5.

Early Filed Return

  1. See IRM 3.11.15.8.6.

♦Entity Perfection - General♦

  1. See IRM 3.11.15.9.

♦Entity Perfection - Employer Identification Number (EIN)♦

  1. See IRM 3.11.15.9.2

♦Entity Perfection - Name Control♦

  1. See IRM 3.11.15.9.3.

    Exception:

    The name change box on Form 1065-B is Line G, box (2).

♦Entity Perfection - Domestic Addresses♦

  1. See IRM 3.11.15.9.5.

    Exception:

    The address change box on Form 1065-B is Line G, box (3).

♦Entity Perfection - Foreign Address♦

  1. See IRM 3.11.15.9.6.

♦North American Industry Classification System (NAICS)♦

  1. See IRM 3.11.15.10.

Date Business Started

  1. See IRM 3.11.15.11.

Total Assets

  1. This section provides instructions for editing Total Assets at End of Year, Box "F" , on Form 1065-B.

  2. If Box "F" is the only transcription line (T-line) with an entry, Short Record the return. See IRM 3.11.15.5.6.4 for Inactive Return instructions.

  3. If Box "F" information is required and the amount is missing, edit the amount shown on Form 1065-B, page 5, Line 14, Column (d), Schedule L. (See Figure 3.11.15-19 )

  4. If Line 14, Column (d) is blank and cannot be computed, use the amount on Line 22, Column (d).

  5. If Box "F" is required and Schedule L, Balance Sheet, is missing or blank, correspond for Schedule L.

♦Computer Condition Codes♦

  1. See IRM 3.11.15.15.

CCC "A" - Date Business Started

  1. See IRM 3.11.15.15.1.

CCC "B" - Schedule M-3

  1. See IRM 3.11.15.15.2.

♦CCC "F" - Final Return♦

  1. See IRM 3.11.15.15.4.

♦CCC "G" - Amended Return♦

  1. See IRM 3.11.15.5.5, Amended Returns.

♦CCC I - Tax Straddles and Future Contracts (Form 6781)♦

  1. See IRM 3.11.15.15.6.

CCC "L" - Treaty Based Positions

  1. See IRM 3.11.15.15.7.

CCC "P" - BMF Mail Indicator

  1. No editing required.

CCC "Q" - Return Filed Claiming TETR Only (Federal Telephone Excise Tax Credit Refund)

  1. No editing required.

♦CCC "R" - Reasonable Cause for Failing to File a Timely Return♦

  1. See IRM 3.11.15.15.9.

CCC "T" - Investor Reporting of Tax Shelter Registration

  1. See IRM 3.11.15.15.11.

♦CCC W - Return Cleared By Statute♦

  1. See IRM 3.11.15.15.12.

CCC X - Refund/Settlement Freeze

  1. See IRM 3.11.15.15.13

CCC "1" - Like-Kind Exchange

  1. See IRM 3.11.15.15.15.

Reserved

  1. This Subsection is reserved.

♦CCC "3" - No Reply to Correspondence♦

  1. See IRM 3.11.15.15.17.

♦CCC "4" - IRC 6020(b) Return♦

  1. See IRM 3.11.15.15.18.

CCC "6" - Suppress the Failure to File on Correct Media Penalty

  1. See IRM 3.11.15.15.20.

CCC "9" - Foreign Partnership (Ogden Only)

  1. See IRM 3.11.15.15.22.

Number of Schedules K-1

  1. See IRM 3.11.15.16.

    Note:

    Form 1065-B, Schedules K-1 are not processed. Do not detach Form 1065-B, Schedules K-1, or Schedules K-1 attached to Form 1065-B.

Salary and Wage Code

  1. Edit a 1 to the right of Page 1, Line 12 on Form 1065-B if an entry greater than zero is present on any of the following:

    1. Form 1065-B, Page 1, Line 12,

    2. Schedule F, Line 22,

    3. Form 8825, Line 13, Column A through H

    4. Form 1125-A, Line 3,

    5. Form 4835, Line 20, or

    6. An attachment showing an amount for salaries, wages or labor.

  2. DO NOT edit for the following:

    1. Contract, outside, custom or miscellaneous labor,

    2. Temporary help,

    3. Management fees,

    4. Janitorial service (or any other type of service),

    5. Maintenance fees, or

    6. Commissions.

EPMF Code

  1. The Employee Plan Master File (EPMF) is a master file maintained at Enterprise Computing Center at Martinsburg (ECC-MTB). This file consists of various types of tax sheltered Pension/Profit Sharing Plans.

  2. Edit a “1” to the right of Page 1, Line 21 on Form 1065-B if an entry greater than zero (±) is present on any of the following:

    1. Form 1065-B, Page 1, Line 21

    2. Schedule F, Line 23,

    3. Form 4835, Line 21,

    4. An attachment showing an amount for retirement plan, pension and/or profit sharing,

    5. Schedule C, Line 19.

Additional Partnership Perfection

  1. This section provides instructions for coding the entries previously edited to the Partnership Edit Sheet, Form 6141.

Audit Codes

  1. See IRM 3.11.15.19.1. If present, edit "1 -" followed by the appropriate audit code in the left margin next to Line 12 of Form 1065-B (in the "Deductions" Section).

Special Income Code

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. If present, edit Code "2 - 1" in the left margin next to Line 12 of Form 1065-B. See IRM 3.11.15.19.2.

♦Installment Sale Indicator♦

  1. Form 6252, Installment Sale Income, is used to report the sale of property on the installment plan.

  2. Codes are based solely on the partnership response to Question 3 on Form 6252

  3. See IRM 3.11.15.19.3. If present, edit "3 -" followed by the appropriate installment sale indicator in the left margin next to Line 12 of Form 1065-B.

  4. Valid codes for Installment Sales Indicator are as follows:

    Code One Form 6252 Multiple Form 6252
    1 "YES" response to Question 3, At least one form has a "YES" response.
    2 "NO" response to Question 3, All "NO" responses or a combination of "NO" and/or blank responses.
    3 "YES" and "NO" are checked or Question 3 is blank, Question 3 is blank on all forms.

Nonrecourse Loan Code

  1. Edit "4 - 1" as the Nonrecourse Loan Code in the left margin next to Line 12 of Form 1065-B in the following instances:

    1. If there is an entry other than zero on Schedule L, Line 19, Columns (b) or (d) on Form 1065-B.

    2. If Schedule K-1 (Form 1065-B) has an entry other than zero on Line a in the Partner's Share of Liabilities section in the lower left side of Schedule K-1. (See Figure 3.11.15-28)

    3. If an attachment indicates a nonrecourse loan.

  2. In all other instances, leave blank.

Historic Structure Code

  1. See IRM 3.11.15.19.5. If present, edit "6 - 3" in the left margin next to Line 12 of Form 1065-B.

Tax Data Perfection

  1. The following information will enable you to perfect tax data.

  2. Edit the following line items per these guidelines:

    1. Edit all monetary amounts as dollars only.

      Exception:

      Tax amounts on Form 1065-B (Lines 26, 27, 28 and 29) are dollars and cents.

    2. If the partnership has entered dollars and cents, and has not entered a decimal point, edit a decimal point or ruled line immediately after the units position of the dollar amount when no solid line is found on the return.

    3. On monetary amounts with a decimal point present, do not edit unless otherwise specified.

    4. If any of the transcribed tax data lines are missing, compute the correct entry from available figures on the return or attachments. If entry cannot be determined, leave blank.

    5. Any misplaced entries must be moved to the appropriate line. The entry on the incorrect line must be "X" ed out.

    6. If the correct line for the misplaced entry cannot be determined, move to the "Other" line.

Form 1065-B, Income Section (Lines 1a through 11)

  1. This section provides instructions for editing Lines 1 through 11 on Form 1065-B.

  2. Do not bracket any entry, unless editing or computing a negative amount.

  3. Perfect all illegible or misplaced entries (when possible).

  4. Delete misplaced entries and edit to appropriate lines.

    If... Then...
    The partnership indicates missing entries are supported by schedules or there are missing entries on Lines 1a through 11,
    1. Check attached schedules and edit TOTAL figures to Lines 10 and 11 of Form 1065-B.

    2. If no schedule(s) present, leave corresponding entries blank.

    Lines 1a through 11 are missing and cannot be determined from an attachment, Combine Lines 24 and 25 (if present) and edit to Lines 10 and 11 of Form 1065-B.

Line 1a - Gross Receipts

  1. Total gross receipts are reported on Line 1a of Form 1065-B.

    If... And... Then...
    Line 1a is blank, There are entries in Lines 1b and 1c, Add Lines 1b and 1c together and edit result to Line 1a of Form 1065-B.
    Lines 1a and 1b are blank, There is an entry on Line 1c, Edit the entry from Line 1c to Line 1a of Form 1065-B.
    Lines 1a, 1b and 1c are blank, There is an entry on Line 3, Add Line 2 to Line 3 and edit the total to Line 1a of Form 1065-B.

Line 1b - Returns and Allowances

  1. Returns and allowances is reported on Line 1b of Form 1065-B.

    If... And... Then...
    Line 1b is blank Lines 1a and 1c have different amounts, Subtract Line 1c from Line 1a and edit result in Line 1b of Form 1065-B.
    Line 1b is blank Lines 1a and 1c have the same amounts, Leave Line 1b blank.

Line 2 - Cost of Goods Sold

  1. Cost of Goods Sold is reported on Line 2 of Form 1065-B.

  2. The entry is from Form 1125-A, Line 8.

    If... And... Then...
    Line 2 is blank There is an entry on Line 8, Form 1125-A, Edit amount from, Line 8, Form 1125-A.
    Line 2 is blank Line 8, Form 1125-A is blank, Subtract Lines 7 from Line 6 on Form 1125-A, and edit result to Line 2 of Form 1065-B.
    Line 2 is blank Lines 7 and 8 on Form 1125-A are blank, Edit amount from Line 6 on Form 1125-A to Line 2 of Form 1065-B.
    If Line 2 is present Form 1125-A is not attached, Dummy Form 1125-A.
  3. See IRM 3.11.15.65, Form 1125-A, Cost of Goods Sold (previously Form 1065-B, Schedule A), for "dummy return" preparation procedures.

Line 3 - Gross Profit

  1. Gross profit is derived by subtracting Line 2 from Line 1c on Form 1065-B.

  2. If Line 3 is blank, subtract Line 2 from Line 1c and edit the result to Line 3 of Form 1065-B.

Line 4 - Net Income (Loss) From Rental Real Estate Activities

  1. The partnership reports Net Rental Real Estate Income or Loss on Line 4 of Form 1065-B.

  2. Form 8825 is used to report Rental Real Estate Income on Line 4 of Form 1065-B.

  3. If there is an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Form 1065-B, Line 4 then Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporationmust be attached.

    Exception:

    Form 8825 is not required on "Final" and Short Record returns.

  4. Edit Form 1065-B, Line 4 and Form 8825 as follows:

    If... And... Then...
    Form 1065-B, Line 4 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8825, Line 21 agrees with Form 1065-B, Line 4,
    1. No action required.

    2. Continue editing the return.

    Form 1065-B, Line 4 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8825, Line 21 is smaller than the amount on Form 1065-B, Line 4,
    1. No action required.

    2. Continue editing the return.

    Form 1065-B, Line 4 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8825, Line 21 is greater than the amount on Form 1065-B, Line 4,
    1. Edit the amount from Form 8825, Line 21 to Form 1065-B, Line 4.

    2. Continue editing the return.

    Form 1065-B, Line 4 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Multiple Forms 8825 are attached,
    1. Combine all Lines 18a (Line 17 on 2009 or prior) and edit to the first Form 8825.

    2. Combine all Lines 21 and edit to the first Form 8825.

    3. Edit the combined Line 21 amount to Form 1065-B, Line 4.

    4. "X" remaining Forms 8825.

    Form 1065-B, Line 4 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8825 is not attached,
    1. Correspond with the partnership to request Form 8825 using Letter 1355C or other approved local correspondence procedure.

    Exception:

    If the partnership attaches a statement in lieu of Form 8825, prepare Form 8825 and attach to the return.

    Form 1065-B, Line 4 has an amount present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Schedule E is attached,
    1. Correspond with the partnership to request Form 8825 using Letter 1355C or other approved Correspondence Action Sheet.

    2. Notate on the Letter 1355C or other approved Correspondence Action Sheet, "SCHEDULE E CANNOT BE FILED WITH Form 1065-B."

      Exception:

      Do not correspond on a "Final" return.

    The amount on Line 21 of Form 8825≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Line 4 of Form 1065-B is blank,
    1. Edit the amount from Form 8825, Line 21 to Form 1065-B, Line 4.

    Form 8825, Line 18a (Line 17 on 2009 or prior) is negative,  
    1. "X " the negative amount.

    2. Continue editing the return.

    Form 8825, Line 18a (Line 17 on 2009 or prior) is blank,  
    1. Compute Line 18a (Line 17 on 2009 or prior) by adding gross rents, Line 2, Columns A through H.

    2. Edit the combined total to Form 8825, Line 18a (Line 17 on 2009 or prior).

    Form 8825, Line 21 is blank,  
    1. Compute Line 21 by combining Lines 18a through Lines 20a.

    2. Edit the computed Line 21 amount to Line 21 and Form 1065-B, Line 4.

    3. Continue editing the return.

Line 5 - Net Income (Loss) From Other Rental Activities

  1. The Net Income or Loss from Rental Activities Other than Rental Real Estate is reported on Line 5 of Form 1065-B.

  2. Accept the partnership entry.

Line 6 - Ordinary Income (Loss) From Other Partnerships, Estates and Trusts

  1. The ordinary income or loss from Other Partnerships, Estates and Trusts is reported on Line 6 of Form 1065-B.

  2. Accept the partnership entry.

Line 7 - Net Farm Profit (Loss)

  1. The net profit or loss from farming is reported on Line 7 of Form 1065-B.

  2. This entry is supported by Schedule F, Profit or Loss From Farming, or an attached schedule.

    1. If Line 7 is blank, edit the Net Farm Income or Loss from Schedule F or attached schedule.

  3. See IRM 3.11.15.63 for Schedule F editing procedures.

Line 8 - Excess of Net Short-Term Capital Gain Over Net Long-Term Capital Loss

  1. The excess of the Net Short-Term Capital Gain over the Net Long-Term Capital Loss is reported on Line 8 of Form 1065-B.

  2. This entry is supported by Schedule D, Capital Gains and Losses, on Page 3 of Form 1065-B.

  3. Accept the partnership entry.

Line 9 - Net Gain (Loss) From Form 4797

  1. The ordinary gains or losses from the sale, exchange or involuntary conversion of assets used by the partnership is reported on Line 9 of Form 1065-B.

  2. This entry is supported by Form 4797, Sales of Business Property.

    If... Then...
    Form 4797 is attached and there is an entry on Line 17, Edit the amount to Line 9 of Form 1065-B.
    Line 17 of Form 4797 includes amounts from Line 7 of Form 4797,
    1. Adjust Line 17 to reflect the correct amount.

    2. Edit corrected amount from Line 17 of Form 4797 to Line 9 of Form 1065-B.

  3. Accept the partnership entry.

Line 10 - Other Income (Loss)

  1. Other income or loss not shown on Lines 1a through 9 is reported on Line 10 of Form 1065-B.

  2. An entry on Line 10 should be supported by an attached schedule.

    If... Then...
    A statement is not attached, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    The attachment shows the type of income to be the same as that reported on any Lines 1a through 9, Decrease the Line 10 amount by that amount and increase the appropriate income Line (Lines 1a through 9) on Form 1065-B.
    Line 10 is blank or illegible and "Other Income" is reported on an attachment to Form 1065-B, Determine and edit the other income amount to Line 10 of Form 1065-B.
  3. Line 10 may include an amount from Form 6478 (Alcohol and Cellulosic Biofuel Fuels Credit). If Form 6478 is attached with a significant amount on *Line 5(c) or Line 8, edit Action Code "343" .

    Note:

    *Line 5(c) or Line 7 on 2009 Form 6478. Line 7(c) or Line 9 on 2008 Form 6478. These instructions apply to Tax Year 2009 only, including fiscal year (200901 through 201011). Do not edit AC 343 for Tax Period 201012.

Line 11 - Total Income (Loss)

  1. The total income or loss (sum of Lines 1c through 10) is reported on Line 11 of Form 1065-B.

    If... Then...
    There is an entry present for total income on Line 11 but the amount is not identified on Lines 1a through 10 and/or attachments, Edit the Line 11 amount to Line 10 of Form 1065-B.
    Line 11 is blank but there are entries on Lines 1a through 10, Compute and edit Line 11 of Form 1065-B.

Form 1065-B, Deductions Section (Lines 12 through 25)

  1. This section provides instructions for editing Lines 12 through 25 on Form 1065-B.

  2. Do not bracket any entry, unless editing or computing a negative amount.

  3. Perfect all illegible or misplaced entries (when possible).

  4. Delete misplaced entries and edit to the appropriate lines.

    If... Then...
    The partnership indicates missing entries are supported by schedules or there are missing entries on Lines 12 through 25,
    1. Check the schedules/attachment and edit TOTAL figure to Lines 24 and 25 of Form 1065-B.

    2. If no schedule(s) present, leave corresponding entries blank.

    Lines 12, 13, 16, 17 or 18 have negative amounts, "X" the negative amounts and include in the calculation for Line 23, "Other Deductions" .
    Lines 12 to 24 are missing and cannot be determined from an attachment, Edit Line 25 amount (if present) to Lines 10 and 11 of Form 1065-B.

Line 12 - Salaries and Wages

  1. The salaries and wages paid during the year is reported on Line 12 of Form 1065-B.

  2. Entry must be positive.

    Note:

    Edit Salary and Wage Code "1" if an entry is present on Line 12. See IRM 3.11.15.51, Salary and Wage Code.

Line 13 - Guaranteed Payments to Partners

  1. Payments made to partners for services or for the use of capital is reported on Line 13 of Form 1065-B.

  2. Entry must be positive.

  3. Accept the partnership entry.

Line 14 - Repairs and Maintenance

  1. The costs of incidental repairs and maintenance that do not add to the value of the property or prolong its life is reported on Line 14 of Form 1065-B.

  2. Accept the partnership entry.

Line 15 - Bad Debts

  1. Total debts that became worthless during the year is reported as bad debts on Line 15 of Form 1065-B.

  2. Accept the partnership entry.

Line 16 - Rent

  1. The rent paid on business property used by the partnership is reported on Line 16 of Form 1065-B.

  2. Entry must be positive.

  3. Accept the partnership entry.

Line 17 - Taxes and Licenses

  1. Taxes and Licenses paid by the partnership is reported on Line 17 of Form 1065-B.

  2. Entry must be positive.

  3. Accept the partnership entry.

Line 18 - Interest

  1. Interest paid by the partnership is reported on Line 18 of Form 1065-B.

  2. Entry must be positive.

  3. Accept the partnership entry.

Line 19c - Depreciation

  1. The depreciation (including the Section 179 expense deduction) claimed on partnership assets is reported on Line 19a through 19c of Form 1065-B.

    If... And... Then...
    Lines 19a and 19c are blank, There is an entry on Line 19b, Arrow Line 19b to Line 19c.
    Lines 19b and 19c are blank, There is an entry on Line 19a, Arrow Line 19a to Line 19c of Form 1065-B.
    Line 19c is blank, There are entries on Lines 19a and 19b, Subtract Line 19b from Line 19a and edit the amount to Line 19c on Form 1065-B.

Line 20 - Depletion

  1. The partnership reports a deduction for depletion on Line 20 of Form 1065-B.

  2. Accept the partnership entry.

Line 21 - Retirement Plans, etc.

  1. Partnership contributions to a qualified pension, profit-sharing, annuity or IRA plan is reported on Line 21 of Form 1065-B.

  2. Accept the partnership entry.

    Reminder:

    Edit the EPMF code of "1" when there is an entry on this line. See IRM 3.11.15.52.

Line 22 - Employee Benefit Programs

  1. Partnership contributions to Employee Benefit Programs (e.g., insurance, health and welfare programs) is reported on Line 22 of Form 1065-B.

  2. Accept the partnership entry.

Line 23 - Other Deductions

  1. The total allowable deductions not deducted elsewhere on page 1 is reported on Line 23 of Form 1065-B.

  2. An entry on Line 23 may be supported by an attached schedule.

Line 24 - Total Deductions

  1. The total deductions (sum of Lines 12 through 23) is reported on Line 24 of Form 1065-B.

    If... Then...
    There is an entry present for Total Deductions on Line 24 but the amount is not identified on Lines 12 through 23, Edit Line 24 amount to Line 23 of Form 1065-B.
    Line 24 is blank but there are entries in Lines 12 through 23, Compute and edit Line 24 of Form 1065-B.

Line 25 - Taxable Income (Loss) From Passive Loss Limitation Activities

  1. Taxable income or loss is derived by subtracting Line 24 from Line 11 on Form 1065-B.

    If... And... Then...
    Line 25 is blank, There are entries on Lines 11 and 24, Subtract Line 24 from Line 11 and edit to Line 25 of Form 1065-B.
    Lines 25 and 24 are blank, There is an entry on Line 11, Edit the Line 11 amount to Line 25 of Form 1065-B.
    Lines 25 and 11 are blank, There is an entry on Line 24, Edit the Line 24 amount to Line 25 of Form 1065-B.

Form 1065-B, Tax and Payments (Lines 26 through 29)

  1. This section provides instructions for editing Lines 26 through 29 on Form 1065-B.

  2. All entries must be positive.

  3. All entries are edited as dollars and cents.

Line 26 - Tax

  1. The tax computed from the recapture of the Investment Credit and Low-Income Housing Credit is reported on Line 26 of Form 1065-B.

  2. Entry may be supported by Form 4255 (Recapture of Investment Credit), Form 8611 (Recapture of Low-Income Housing Credit) or other attachment.

  3. Accept the partnership entry.

Credit for Federal Telephone Excise Tax Paid (TETR)

  1. Edit Action Code 420 on Form 1065-B if Form 8913, Credit for Federal Telephone Excise Tax Paid, is attached.

  2. Do not edit Action Code "420" on amended Form 1065-B.

  3. Sequence Form 8913 after Form 1125-A.

Line 27 - Other Payments

  1. Other payments made by the partnership are reported on Line 27 of Form 1065-B.

  2. Entry may be supported by Form 2439Notice to Shareholders of Undistributed Long-Term Capital Gains, Form 4136 (Credit for Federal Tax Paid on Fuels, Form 7004Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, or other attachment.

  3. Accept the partnership entry.

Line 28 - Amount Owed

  1. The balance of tax due (Line 27 subtracted from Line 26) is reported on Line 28 of Form 1065-B.

  2. Entry must be present if Line 27 is smaller than Line 26.

    If... And... Then...
    Line 28 is present, Lines 26 and 27 are blank, Edit amount in Line 28 to Line 26 of Form 1065-B.
    Line 28 is blank, There are entries in Lines 26 and 27, Subtract Line 27 from Line 26 and edit to Line 28 of Form 1065-B.
    Lines 28 and 27 are blank, There is an entry on Line 26, Edit amount in Line 26 to Line 28 of Form 1065-B.
  3. If pre-computed interest or delinquency penalty or additional charge is evident, ensure that it has not been included in Line 26 or 27, nor reduced Line 28.

Green Rockered Money Amount on Line 28
  1. Form 1065-B will no longer have the payment amount green rockered on it.

Line 29 - Overpayment

  1. Excess payment (Line 27) exceeding the tax shown on Line 26 is a refund and reported on Line 29 of Form 1065-B.

  2. Entry must be present if Line 27 is larger than Line 26.

    If... And... Then...
    Line 29 is blank, There is an entry on Line 28, Take no action.
    Line 29 is blank, There is no entry on Line 28, Subtract Line 26 from Line 27 and edit to Line 29 of Form 1065-B.
    Lines 29, 28 and 26 are blank, There is an entry on Line 27 (or 26 and/or 27), Edit Line 27 amount to Line 29 of Form 1065-B.

Form 1065-B, Page 2, Part II - Taxable Income or Loss From Other Activities

  1. This section provides instructions for editing Taxable Income or Loss From Other Activities (Lines 1 through 13) on Page 2, Part II of Form 1065-B.

  2. Do not bracket any entry.

Line 1 - Interest

  1. Taxable interest from activities other than passive loss limitation activities is reported on Line 1 in Part II.

  2. Accept the partnership entry.

Line 2a - Total Ordinary Dividends

  1. Taxable Ordinary Dividends are reported on Line 2a in Part II of Form 1065-B.

  2. Accept the partnership entry.

Line 3 - Gross Royalties

  1. Gross Royalties are reported on Line 3 in Part II of Form 1065-B.

  2. Accept the partnership entry.

Line 4 - Excess of Net Short-Term Capital Gain Over Net Long-Term Capital Loss

  1. The Excess of Net Short-Term Capital Gain over the Net Long-Term Capital Loss is reported on Line 4 in Part II of Form 1065-B.

  2. Entry may be supported by Schedule D.

  3. Accept the partnership entry.

Line 5 - Other Income (Loss)

  1. Other income or loss not reported elsewhere on the return is reported on Line 5 in Part II of Form 1065-B.

  2. Entry may be supported by an attached schedule.

  3. Accept the partnership entry.

Line 6 - Total Income (Loss)

  1. Total income or loss (sum of Lines 1, 2c, 3, 4 and 5) is reported on Line 6 in Part II of Form 1065-B.

  2. Accept the partnership entry.

Line 7 - Interest Expense on Investment Debts

  1. Interest paid on a debt allowable to property held for investment is reported on Line 7 in Part II of Form 1065-B.

  2. Entry is supported by Form 4952, Investment Interest Expense Deduction.

  3. Entry must be positive.

  4. Accept the partnership entry.

Line 8 - State and Local Income Taxes

  1. State and local income taxes paid by the partnership that would be allowed as itemized deductions on any partners' income tax return if they were paid directly by the partner are reported on Line 8 in Part II of Form 1065-B.

  2. Entry must be positive.

  3. Accept the partnership entry.

Line 9 - Charitable Contributions

  1. Contributions or gifts to a charitable organization are reported on Line 9 in Part II of Form 1065-B.

  2. Entry may be supported by Form 8283, Noncash Charitable Contributions or an attached statement.

  3. Entry must be positive.

  4. Accept the partnership entry.

Line 10a - Total Miscellaneous Itemized Deductions

  1. Miscellaneous Itemized Deductions such as, investment advisory fees, subscriptions to investment advisory publications and the cost of safe deposit boxes are reported on Line 10a in Part II of Form 1065-B.

  2. Entry must be positive.

  3. Accept the partnership entry.

Line 10b - Deductible Amount

  1. The deductible amount of the miscellaneous itemized deductions (30% of Line 10a) is reported on Line 10b in Part II of Form 1065-B.

  2. Entry must be positive.

  3. Accept the partnership entry.

Line 11 - Other Deductions

  1. Other