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If you don't get a K-1, you still have to file on time

August 31, 2011

Many taxpayers with extended returns continue to wait in frustration for K-1s from partnerships or S corporations to include on their tax returns. Some of those K-1s will never arrive. That doesn't mean you just skip filing your 1040.

A California couple waiting on a K-1 for 2003 was filed in 2005. The IRS assessed late return penalties. The couple asked the Tax Court to abate the penalties because they didn't get their K-1. From the Tax Court (my emphasis, citations omitted):

Consequently, they claim they did not have the information needed to timely file their return for 2003. Petitioners further argue that because they were unable to file a timely return, they were also unable to timely pay the tax liability shown on their return.

The unavailability of information or records does not necessarily establish reasonable cause for failure to file a timely return. More specifically, a third party's failure to provide a necessary Schedule K-1 is not sufficient to establish reasonable cause. Petitioners were required to timely file a return based upon the best information available and to file thereafter an amended return if necessary.

The Moral? Even extended K-1s are supposed to be issued by September 15. If that K-1 doesn't show up by October, go ahead and file the best you can. You can amend the return later if the K-1 finally does arrive.

Cite: Whitney, T.C. Summ. Op. 2011-106.

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