On a partnership’s Form 1065, which of the following statements is always true?

Question

On a partnership’s Form 1065, which of the following statements is always true?

a. The partnership will reconcile ordinary income from operations (excluding separately stated items) to book income on Schedule M-1 or M-3. b. The partnership balance sheet is required to be presented on a tax basis. c. All partnership income and expense items are reported on Form 1065, page 1. d. The partnership’s equivalent of taxable income is reported in the “Analysis of Income (Loss).” e. All of the above statements are true.

Explanation / Answer

Solution: The partnership’s equivalent of taxable income is reported in the “Analysis of Income (Loss)

Explanation:
Option a: Incorrect. The partnership reconciles the “taxable income equivalent”, thus reconciles the net Income (Loss) from the Analysis of Income (Loss) to book income.
Option b: Incorrect. The partnership’s balance sheet (on Schedule L) will be typically reported on a book basis
Option c: Incorrect. The reports on partnership income from operations on Form 1065, page 1, and also reports several types of income and expenses (separately stated items) on Form 1065, Schedule K

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