Correcting errors that go back several years

Steve Schweitzer on

Thanks to Rip West for his response to this query in the NAIC Club-Treasurers newsgroup:

Steve,

The 'correct' answer is to go back, correct all the entries when recorded, redo your distribution of earnings for each year, file amended partnership returns for your club for those years, send amended k-1s to you member for those years, and notify your members to file amended 1040s for those years. As I say, that's the 'correct' treatment. However, for the amounts involved, I wouldn't do that in your place. I would make the corrections as of the beginning of the current year 2003. I think your chances of being audited by the IRS are slight, but I would tell your partners what has happened and let them know there is a chance that prior years may be affected.

Rip

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