The IRS provided transition penalty relief last week to partnerships in complying with new rules for reporting partners’ capital account balances.
The relief in Notice 2021-13 states that partnerships will not be subject to a penalty under Sec. 6698, 6721 or 6722 due to incorrect information in partners’ beginning capital accounts on 2020 Schedules K-1 if the partnership can show it took ordinary and prudent business care in following the 2020 Form 1065 instructions in that regard.
Partnerships also will not be subject to a penalty under the same code sections due to errors in reporting partners’ ending 2020 capital account balances that result solely from incorrect beginning capital balances eligible for relief. Learn more.