Expert: Mike Wellman - 5/31/2008

Question
QUESTION: My boss says there is a regulation that states a partnership with less than 10 partners is not required to file a 1065.  I cannot find such a regulation.  Is there one?

ANSWER: You boss is nuts. Of course not.

---------- FOLLOW-UP ----------

QUESTION: I found out he's not nuts.  I found the code.

http://www.pro1040.com/Partners/abate_or_not_assess_late_fil_pen.htm

I forget the code that talks about the above (its at work. But from the code, you can abate the penalty thru revenue procedure 84-35.  There are many that do not realize this is out there.

Answer
Hold on there cowboy. Your question asked if a partnership with fewer than ten partners is required to file a 1065. The answer is, of course they are. The regs you cited relate to the late filing penalty - a rule I am very familiar with. In order to abate the penalty - you MUST file the return among other things to establish reasonable cause. So the answer remains that the return must be filed.