Magazine article The CPA Journal

Preparer of Partnership Returns Held a Preparer for Limited Partners

Magazine article The CPA Journal

Preparer of Partnership Returns Held a Preparer for Limited Partners

Article excerpt

Randall Goulding, an attorney and CPA, took an active part in the formation and operation of three limited partnerships. He helped in preparing the offering memoranda, acted as legal counsel, helped decide to invest the partnerships' capital, and negotiated and drafted purchase agreements. He also prepared the partnerships' returns (including Schedules K and K-1) and signed them as paid preparer. He received compensation from the partnerships as follows: $90,000 in 1979, $80,000 in 1980 and $86,255 in 1981.

Goulding had no contact with the limited partners of the partnership other than through his preparation of the partnership tax returns and the Schedules K-1. He gave them no advice regarding the use of the information on Schedules K-1 and he did not prepare their individual returns. In preparing the returns, Goulding depreciated the entire cost of technologies purchased by the partnership, including amounts that were contingent on reaching unrealistically high sales revenues. He treated startup costs as deductible business expenses and included debt guaranteed by the partners, which was contingent on the partnership reaching unrealistically high sales levels, as giving the partners basis. …

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