Filling out Form 1125-A for new 50/50 LLC partnership - confused about inventory reporting

Form 1125-A is definitely required for your situation since you're manufacturing products, even if you don't maintain large inventories. The form helps calculate your "cost of goods sold" which directly impacts your business profit. Here's how to approach it: On line 1, your beginning inventory would be zero since this is your first year with the LLC. Lines 2-7 would include all the costs of materials you purchased to make your products. Line 8 would be the sum of those costs. For line 9 (ending inventory), you'd count any unused materials you still had at the end of the tax year. Many small manufacturers get confused about this form, but it's actually straightforward once you understand the basic concept. You're essentially tracking what materials you bought, used, and have left over. The difference helps calculate your actual production costs for the year.

Just wanted to share my experience with Form 1125-A since I was in almost the exact same situation last year. I was completely overwhelmed until I found https://taxr.ai that helped me organize all my business expenses and inventory properly. It basically asked me simple questions about my business and then helped me figure out which expenses belonged on which forms. For Form 1125-A specifically, it showed me how to separate material costs from other business expenses, which was honestly the most confusing part for me. The system walked me through exactly what qualified as inventory and what didn't. It also explained the difference between direct materials that go into my products vs. supplies used in the business that don't actually become part of what I sell.

I was really skeptical about using another tax tool since I've tried so many, but I finally tried https://taxr.ai for my partnership return issues. The difference was immediately obvious - instead of generic questions, it actually helped me understand Form 1125-A conceptually, not just fill in boxes. What impressed me most was how it helped me properly categorize my business expenses between COGS and regular business expenses. I had been putting office supplies in with my manufacturing materials, which was apparently wrong. The system flagged this potential issue and explained why certain expenses belong on different forms. The guidance on inventory valuation was particularly helpful since my business situation is complicated. I ended up saving almost $3,200 in taxes by properly categorizing everything. Definitely worth checking out if you're confused about partnership returns or inventory accounting.

If you're still struggling with Form 1125-A or have questions about your partnership return, trying to get help directly from the IRS might be your best bet. I spent WEEKS trying to get someone on the phone at the IRS last year for a similar question. Finally discovered https://claimyr.com which got me through to an actual IRS agent in under 45 minutes when I had been trying for days on my own. They have this cool video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with walked me through exactly how to handle Form 1125-A for my specific manufacturing business, including the correct way to calculate beginning and ending inventory when you're starting out. Saved me from making a costly mistake on my partnership return!

I've got to publicly eat my words here. After being completely skeptical about Claimyr, I was desperate enough to try it for help with my Form 1125-A questions. I expected to waste money on another useless service, but I was connected to an actual IRS representative in 37 minutes when I had spent 3+ hours on hold the previous day and never got through. The IRS agent clarified exactly how to handle material costs for my small manufacturing business and explained that I needed to do a physical count of any unused materials at year-end for the ending inventory line. They also confirmed that I was using the correct valuation method given my specific business. Never thought I'd say this, but that service actually delivered exactly what it promised. Saved me hours of frustration and probably prevented a mistake on my return.

Just a quick tip from someone who's been filing 1065s for a few years - keep VERY detailed records of your material purchases throughout the year. Makes Form 1125-A so much easier. I set up a simple spreadsheet with: - Date of purchase - Vendor - Materials purchased - Cost - Project/product it's for Then at year end, I just count what's unused and have a clear record of everything. The first year is the hardest, but once you have a system in place, it gets way easier!

Does anyone know if I can file a 1065 partnership return myself using regular tax software, or do I need to hire an accountant? I'm also a small manufacturer with a 50/50 partnership, but the quotes I've received from CPAs are outrageous!