1065 Schedule A.
The cost of goods sold is computed on Schedule A to enter on page 1.
Small inventory-based partnerships that qualify to use the cash method of accounting (average annual gross receipts of $10 million or less, Rev Proc. 2002-28), do not need to report inventory in completing the cost of goods sold. Instead, under the cash method, inventory is deducted as material or supplies when sold. Many small partnerships, even those with some inventory, will have no entries in Schedule A.
1065 Schedule B.
Most small partnerships will have entries only in the highlighted areas of Schedule B. The type of partnership should be specified and if any individual owns 50% or more of the partnership, further information on this individual must be provided on Schedule B1.
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