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Fiscal Year Partnership (ending Nov.) - Form 8752

February 02, 2017 • FLB • Log In to Post Comments

We have a partnership client (residential real estate rental) with a November 30th fiscal year that has had small losses due to depreciation and now that the depreciation expense has ended has a profit.  We use ProSystems and Form 8752 in prior years was always under the $500 threshold for paying, so no payments have been made.  This year, the amount is just over $500, so I'm looking at the form closer.  I searched Caltax and found your Life Cycle of LLCs and Partnerships and in reading about this form on page 16 it states 'if the initial payment is less than $500 it need not be made. However, subsequent payments, even if less than $500, must be made by May 15th of the current tax year'.  So it appears this partnership should have been paying and tracking the 'deposit' since year 2 (for any years they had a profit). The instructions for the form are not very clear.  For partnerships it states Line 1 net income is the aggregate (not less than zero) of the partnership's items of income and expense, other than tax-exempt income, nondeductible expenses, and guaranteed payments under section 707(c).  For base years beginning in 2015, line 1 should equal the amount on the 2015 Form 1065, line 1, of Analysis of Net Income (loss), plus the aggregate items of income and expense, if any, reported on theattached statement for Schedule K, line 20c (but not less than zero).  Rental real estate is reported on Form 8825 and does not flow to Line 1 of Form 1065 (nor to line 1 of Schedule K), it flows through to Line 2 of Schedule K.  Other than the rental profit on line 2 and the distributions to the partners on line 19a, Schedule K is blank.  Should I include the rental profit on line 1 of Form 8752?  The way I read the instructions, I don't think so.  We use CCH ProSystems Fx, so
I copied the 2014 return and as a test increased the profit so that the required payment was over the $500 threshold, then proformaed it to 2015 and ProSystems marks that they made a payment over $500, however it doesn't list the payment anywhere, so it isn't tracking prior year payments, or giving them credit (and refunding any overage paid in prior years). I would think what we pay for ProSystems it would track this.
Any comments greatly appreciated!


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