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Investor Tax Responsibility for Missing K-1

Forum|Forum|5 years ago
October 5, 2020
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I am awaiting receipt of an investment partnership K-1. The sponsor has been difficult to deal with and delinquent in providing both financial and tax reporting. The filing deadline is looming and I'm not sure what I should do about this issue. I don't think the investment has generated taxable income in 2019, but really don't know what's going on other than I haven't received any distributions for 2019. I don't want be exposed to any potential interest or penalties. Is there something I can do vis-a-vis the IRS to alert them and thereby protect myself?

Best answer by Anonymous_

@Curious One wrote:

...Is there something I can do vis-a-vis the IRS to alert them and thereby protect myself?

It makes no difference since you are going to be held responsible for the inclusion of any net income or gain that is passed through to you via the K-1 (once you finally receive it).

In other words, there is no way to "protect" yourself beyond making additional estimated payments and filing an amended return (if necessary) after you receive your K-1.

To be perfectly blunt, you might want to consider consulting your legal, tax, and financial advisors about the viability of investing in an entity that issues as K-1.

A

Anonymous_Answer

Employee

@Curious One wrote:

...Is there something I can do vis-a-vis the IRS to alert them and thereby protect myself?

It makes no difference since you are going to be held responsible for the inclusion of any net income or gain that is passed through to you via the K-1 (once you finally receive it).

In other words, there is no way to "protect" yourself beyond making additional estimated payments and filing an amended return (if necessary) after you receive your K-1.

To be perfectly blunt, you might want to consider consulting your legal, tax, and financial advisors about the viability of investing in an entity that issues as K-1.

C

Curious OneAuthor

Not entirely surprising, but concerning in any event given the complete lack of control by LPs over these things. Someone had suggested I should contact the IRS and request some kind of assistance. I think they mentioned a private letter ruling, but I suspect this would require a lot of formalities as well as time that I don't have before next week.

As for your last sentence, are you suggesting that K-1 investing is problematic generally? Or only in relation to the specific circumstance I've outlined?

Critter-3

Just like all things ... some LPs are good and properly report things timely and some are not. Since the Partnership return had to be filed no latter than 9/15 and the K-1 forms mailed in a timely manner so you can file your personal return by 10/15 and you have not gotten them yet AND you say you cannot reach them then I would say these are one of the bad ones. Some LPs have you download the K-1 forms online and they are not mailed ... did you see if you can download them ?