2008 Instruction 1065-SCHEDULE C
Department of the Treasury
Internal Revenue Service
2008
Instructions for Schedule C
(Form 1065)
Additional Information for Schedule M-3 Filers
Section references are to the Internal Revenue Code unless
information. When more than one partner transfers
otherwise noted.
property to a partnership pursuant to a plan, the
disclosure may be made by the partnership rather than
General Instructions
by each partner.
Question 2. Answer "Yes" if this partnership is a partner
Purpose of Form
in another partnership and has received special
Use Schedule C (Form 1065) to provide answers to
allocations of income, gain, loss, deduction, or credit from
additional questions for filers of Schedule M-3 (Form
such partnership. For more information on special
1065), Net Income (Loss) Reconciliation for Certain
allocations, see Special Allocations, in the Instructions for
Partnerships.
Form 1065.
Example. P, a partnership, joins with B, an individual,
Who Must File
in forming the PB partnership. P and B each contribute
Schedule C (Form 1065) must be filed by all partnerships
$50,000 cash to PB partnership. Profits and losses are
that file Form 1065, U.S. Return of Partnership Income,
split 50/50, with the exception of depreciation, which is
and are also filing Schedule M-3 (Form 1065). Attach
allocated 99% to P and 1% to B. P answers "Yes" to
Schedule C (Form 1065) to Form 1065.
question 2 because its 99% allocation of depreciation
deductions from PB partnership is disproportionate to its
Specific Instructions
ratio of sharing other items from PB partnership.
Question 1. For certain transfers that are presumed to
Question 5. The term "change in accounting principle"
be sales, the partnership or the partners must comply
means a change from one generally accepted accounting
with the disclosure requirements in Regulations section
principle to another generally accepted accounting
1.707-8. Generally, disclosure is required when:
principle as described in "Statement of Financial
1. Certain transfers to a partner are made within two
Accounting Standards No. 154 Accounting Changes
years of a transfer of property by the partner to the
and Error Corrections."
partnership;
For purposes of this question, answer "Yes" if such a
2. Certain debt is incurred by a partner within two
change in accounting principle occurred during the tax
years of the earlier of:
year and such change resulted in, or is expected to result
·
A written agreement to transfer or
in, an effect on the amount of income reported for
·
A transfer of the property that secures the debt, if
financial statement purposes.
the debt, nevertheless, is treated as a qualified liability; or
Question 6. File Form 3115, Application for Change in
3. Transfers from a partnership to a partner occur
Accounting Method, to request a change in a method of
which are the equivalent to those listed in 1 or 2 above.
accounting. See the Instructions for Form 3115 for
The disclosure must be made on the transferor
information on requesting a change in accounting
partner's return using Form 8275, Disclosure Statement,
method.
or on an attached statement providing the same
Cat. No. 51534B