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May 26, 2020

Reminder: Changes Still Coming to Partnership Reporting Requirements

Partnership Reporting Requirements

The disruption related to the COVID-19 pandemic likely bumped several to-do items down on the priority list for private equity and venture capital firms. As the world starts to adjust to its new version of normal, it’s worth beginning work on some upcoming reporting changes that may be coming your firm’s way.

New Schedule K-1 information requirements will go into effect for the 2020 tax reporting year, and it may require substantial time to put the appropriate information-gathering and reporting protocols into place to ensure compliance. Some of the changes had originally been scheduled to take effect for the 2019 tax year and were delayed one year (see our article from January 2020 here). 

Beginning in 2020, partnerships will be required to report capital accounts on a tax basis. For the 2018 and 2019 tax years, partnerships were already required to disclose tax capital accounts at the beginning and end of the year for partners with negative tax capital accounts as of the beginning or the end of the tax year. The new requirement for 2020 should not be a significant change for those funds that previously had partners with negative tax capital accounts. Other funds should begin to assess now how to incorporate the new requirement into their compliance process and timeline.

For more information about the upcoming changes to partnership reporting, please contact us.

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