Irs Form 1065 2011: Fill & Download for Free

Circular 230 Disclaimer: To comply with IRS requirements, please be advised that, unless otherwise stated by the author, any tax advice contained in this answer is not intended or written to be used, and cannot be used, to avoid any federal tax penalty that may be imposed, or to promote, market or recommend to another any referenced entity, investment plan or arrangement.This answer summarizes my understanding based on the facts you have laid out and the relevant regulations.WRT to the Canadian payroll: Compensation paid to nonresident aliens for personal services not performed in the United States are not considered to be wages, per IRS Publication 515 (see http://www.irs.gov/pub/irs-pdf/p515.pdf), therefore you would not report them on line 9 of the 1065. You would report them on line 20 of the 1065, attaching a statement to document the purpose of the payments (i.e. compensation to nonresident aliens not considered to be wages). Note that the partnership's foreign source income and deductions attributable to the foreign source income must be entered on Schedule K of the 1065 (lines 16a through 16n).WRT to the compensation received by the managing partners: Based on the information you provided in the comments, they pass the substantial presence test for 2010 and would be considered to be US residents. Because they re-entered Canada in September and (I presume) established a residential tie there after they re-entered, they would also be considered to be residents of Canada as of the date of re-entry. Ordinarily, a resident alien who permanently leaves the United States after meeting the substantial presence test is considered to be a full-year resident of the US; however, if the individual does not return to the US during 2011 and can establish as of the end of 2010 that the individual's tax home was in Canada and that the individual has "closer ties" to Canada than to the US, the individual can terminate US residency as of the last date that the individual was in the US during 2010. See IRS Publication 519, http://www.irs.gov/pub/irs-pdf/p519.pdf.It is correct to deduct the total compensation paid as guaranteed payments to the managing partners on line 10 of the 1065. The managing partners will pay US SE tax on the compensation earned during the period . The really dicey questions will come up if the managing partners can - and do - opt to terminate their US residency as of their last full day in the US. At that point, they become foreign partners - and that will affect not only the tax treatment of their compensation earned during the period of US nonresidency/Canadian residency but also the treatment of their share of partnership income. Depending on the nature of the partnership income, the partnership may need to withhold US tax from their distributive shares of the income earned during the period of nonresidency. I couldn't even begin to advise you here on the issues that could arise. I strongly urge you to consult with a tax professional with extensive experience in dealing with international tax issues.

To add:I’ve discovered a partner, that had been listed as a general partner, can be listed as a limited partner. This will eliminate a lot of SE tax. This partner is on an IRS payment plan dating back to 2011. Because of this, they can still file an amended 1040 because they have until two years after payment is made. But, they’d need a corresponding amended Sch. K-1. Those are only supposed to be able to be amended for three years.Any guidance?