11.11 When a Partner Reports Income or Loss

You report your share of the partnership gain or loss for the partnership year that ends in your tax reporting year. If you and the partnership are on a calendar-year basis, you report your share of the 2012 partnership income on your 2012 income tax return. If the partnership is on a fiscal year ending March 31, for example, and you report on a calendar year, you report on your 2012 return your share of the partnership income for the whole fiscal year ending March 31, 2012—that is, partnership income for the fiscal year April 1, 2011, through March 31, 2012.

If a Section 444 election of a fiscal year is made on Form 8716, a special tax payment must be computed for each fiscal year and if the computed payment exceeds $500, it must be paid to the IRS. The tax payment is figured and reported on Form 8752. The tax does not apply to the first tax year of a partnership’s existence but Form 8752 must still be filed. In later years, a refund of prior payments is available to the extent the prior payments exceed the payment required for the current fiscal year. For example, if the required payment was $12,000 for the fiscal year July 1, 2011–June 30, 2012, and the required payment for the fiscal year starting July 1, 2012, is $10,000, a $2,000 refund may be claimed on Form 8752. Refunds of prior year payments also are available if the fiscal-year election is terminated and a calendar year adopted or if the partnership liquidates.