When a partnership dissolves, terminates, or ceases operations, a final tax return must be filed by the 15th day of the 3rd month following the date its tax year ended. While the instructions for the 2018 Form 1120S state the form can be used when filing a short year return which begins and ends in 2019, TaxAct® does not support this scenario. Because the TaxAct calculations are based on 2018 tax law, entering 2019 beginning and end dates will not cause the program to calculate based on 2019 tax laws.
Per the IRS Instructions for Form 1065
, page 4: Period Covered
The 2019 Form 1065
is an information return for calendar year 2019 and fiscal years that begin in 2019 and end in 2020. For a fiscal year or a short tax year, fill in the tax year space at the top of Form 1065
and each Schedule K-1
The 2019 Form 1065
may also be used if:
- The partnership has a tax year of less than 12 months that begins and ends in 2020, and
- The 2020 Form 1065 isn't available by the time the partnership is required to file its return.
However, the partnership must show its 2020 tax year on the 2019 Form 1065 and incorporate any tax law changes that are effective for tax years beginning after 2019.
Therefore, if the due date of the final tax return falls before the new year's tax forms are released by the IRS, you will need to use the current year's tax forms.
As a possible work around, you could manually enter any amounts which are affected by 2020 law changes and paper file the return. You will need to verify that the proper amounts are being reported on the 1065
return based on the tax code for 2019 and override those entries that would be changed due to tax law changes (TaxAct will calculate based on the 2019 tax code).
An Alert will be generated which states: Error or Omission: Invalid Tax Year An invalid tax year has been entered. The tax year must begin in 2019 and the ending date must be after the beginning date.
This Alert will prevent electronic filing of the return.