Interest income reported in wrong spot on 1065

[jasdlm]

I'm an idiot and I included the interest income (about 10 grand) for a partnership in the gross income total instead of in the appropriate 'other income' and flowing through schedule K line 5 onto the k1s. All income for the year, including the interest income, was reported, so there will be no change to income flowing through to the partners. I have already efiled the 1065.

My question: I am assuming the bank issued a 1099-T, although I do not have it (I used the reconciled QB and bank statements to complete the return. Do I need to amend the 1065, generating amended K1s for all partners, and causing each partner to have to amend the 1040 to report the interest income on line 8a instead of line 17? There won't be any change in income since the interest was erroneously reported under 'gross receipts'. I'm wondering if the 1099-int will generate a letter to the partnership about the interest income not being reported.

I really don't want to tell all these guys they have to amend their returns, but I don't really want an IRS notice, either.

Thanks.

[grandmabee]

I'm an idiot and I included the interest income (about 10 grand) for a partnership in the gross income total instead of in the appropriate 'other income' and flowing through schedule K line 5 onto the k1s. All income for the year, including the interest income, was reported, so there will be no change to income flowing through to the partners. I have already efiled the 1065.

My question: I am assuming the bank issued a 1099-T, although I do not have it (I used the reconciled QB and bank statements to complete the return. Do I need to amend the 1065, generating amended K1s for all partners, and causing each partner to have to amend the 1040 to report the interest income on line 8a instead of line 17? There won't be any change in income since the interest was erroneously reported under 'gross receipts'. I'm wondering if the 1099-int will generate a letter to the partnership about the interest income not being reported.

I really don't want to tell all these guys they have to amend their returns, but I don't really want an IRS notice, either.

Thanks.

I think the 1099-int will generate a missing income notice if it is 10,000. You could explain at that time but probaly easier to amend the 1065. I assume IRS matches with the 1065 as well as 1040.

[kcjenkins]

Main question would be would it make a difference on the 1040s, not in the total but in the characterazation of the type of income? It could be significant to AMT issues, for example. That's what you have to consider. I think if it affects even one partner that way, you have to amend it.

[jasdlm]

Thanks, all. I'll amend . I really hate it when I make really stupid mistakes.

[michaelmars]

Thanks, all. I'll amend . I really hate it when I make really stupid mistakes.

Please describe a smart mistake for me!

[Catherine]

Please describe a smart mistake for me!

Or point out even ONE of us who doesn't mind making a mistake here and there.

[jasdlm]

One you can blame on someone else!

[lbbwest]

I was worried about he SE issue, (increased by gross income attributable to interest.) Every day I make mistakes, on the good days I catch them before anyone else. On the moderate days someone else catches them before they go out, on the bad days, that's right, you already know about them. stay sane. lbb

[jklcpa]

I wa worried about SE too. Also, if the affected partners have investment interest expense on 4952, the investment interest income needs to flow there from the K-1.

[jasdlm]

lbbwest - good to see you. I've missed you this season.

[jasdlm]

Thanks to both lbb and jkl . . . I have amended the return and already gotten a signature on the amended 1065 from the tax matters partners. I'm just really annoyed with myself!

An aside: I can't efile the amendment because the K1s have been modified . . . at least according to ATX. Is this accurate? How could you amend a 1065 and not modify the K1s?

[michaelmars]

i would wait anyway to amend since you don't want it crossing with the original. Just send out the amended k-1's to the partners and file the amended return in a few weeks.