| Publication Number: 541 |
| Partnerships |
| Important Change
for 2001 |
| Paid preparer authorization. |
| A partnership can allow the IRS to discuss its 2001 tax return with the paid preparer who signed it by checking the "Yes" box in the signature area of the return. This authorizes the IRS to call the paid preparer to ask any questions that may arise during the processing of the return. The partnership is also authorizing the paid preparer to perform certain actions. See the instructions for Form 1065 or 1065–B. |
| Important Reminder |
| Photographs of missing children. |
| The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1–800–THE–LOST (1–800–843–5678) if you recognize a child. |
| Introduction
|
| This publication explains how the income tax law applies to partnerships and to partners. Generally, a partnership does not pay tax on its income but "passes through" any profits or losses to its partners. Partners must include partnership items on their tax returns. |
| For a discussion of business expenses a partnership can deduct, see Publication 535. Members of oil and gas partnerships should read about the deduction for depletion in chapter 10 of that publication. |
| Certain partnerships must have a tax matters partner (TMP) who is also a general partner. For information on the rules for designating a TMP, see the instructions for Schedule B of Form 1065 and section 301.6231(a)(7)–1 of the regulations. |
| Caution: |
| Many rules in this publication do not apply to partnerships that file Form 1065–B, U.S. Return of Income for Electing Large Partnerships. For the rules that apply to these partnerships, see the instructions for Form 1065–B. However, the partners of electing large partnerships can use the rules in this publication except as otherwise noted. |
| Tax withholding, foreign person or firm | Withholding on foreign partner or firm. |
| If a partnership acquires a U.S. real property interest from a foreign person or firm, the partnership may have to withhold tax on the amount it pays for the property (including cash, the fair market value of other property, and any assumed liability). If a partnership has income effectively connected with a trade or business in the United States, it must withhold on the income allocable to its foreign partners. A partnership may have to withhold tax on a foreign partner's distributive share of fixed or determinable income not effectively connected with a U.S. trade or business. A partnership that fails to withhold may be held liable for the tax, applicable penalties, and interest. For more information, see Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. |
 Comments 
Suggestions
| Comments and suggestions. |
| We welcome your comments about this publication and your suggestions for future editions. |
| You can e-mail us while visiting our web site at www.irs.gov. |
| You can write to us at the following address:
Internal Revenue Service
Technical Publications Branch
W:CAR:MP:FP:P
1111 Constitution Ave. NW
Washington, DC 20224
|
| We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. |
|
Useful items |
| Publication 505: Tax Withholding and Estimated Tax
533: Self-Employment Tax
535: Business Expenses
537: Installment Sales
538: Accounting Periods and Methods
544: Sales and Other Dispositions of Assets
551: Basis of Assets
925: Passive Activity and At-Risk Rules
946: How To Depreciate Property
|
| Form (and Instructions)
1065
U.S. Return of Partnership Income
Schedule K–1 (Form 1065)
Partner's Share of Income, Credits, Deductions, etc.
8308
Report of a Sale or Exchange of Certain Partnership Interests
8582
Passive Activity Loss Limitations
8736
Application for Automatic Extension of Time To File U.S. Return for a Partnership, REMIC, or for Certain Trusts
8832
Entity Classification Election
8865
Return of U.S. Persons With Respect to Certain Foreign Partnerships
|
| See How To Get Tax Help near the end of this publication for information about getting publications and forms. |
to find additional instances of index items.