The first return I worked on coming out of my master’s program was a partnership return. I had never seen a 1065 before.
There were Excel workpapers. There was CaseWare. There were schedules feeding other schedules, adjustments to book, and numbers that were supposed to tie together. I was trying to understand what I was looking at, where to start, and how any of it connected.
Partnership tax has plenty to teach a new practitioner. But before I could get to much of that, I had to get the file ready.
Anyone who has prepared a partnership return knows what comes next.
The hours before the analysis
Roll forward the Excel workpapers. Bring in the current-year trial balance. Check the beginning balances. Figure out whether the client booked last year’s adjustments. See whether retained earnings rolls.
Then start booking entries: accrual-to-cash tax journal entries, adjustments for nondeductible expenses, fixed asset additions, lower-tier K-1 activity. Update the supporting schedules. Assign tax export codes so the accounts land in the right places.
On a more complex partnership, there is another workbook waiting for you: partner allocations. Work through the waterfall. Update the tiers. Or open the targeted capital allocation workpaper and figure out how its circular references are supposed to resolve.
Depending on the partnership, that work alone can take hours. When you are brand new, it takes longer, because you are learning the mechanics of the file at the same time you are trying to complete it.
The work has to be right. But the client gets no additional benefit because I spent another hour rolling schedules or tracing a broken formula. And doing the same routine adjustment again does not necessarily deepen my understanding of their business.
Meanwhile, the questions I want to spend time on are still waiting. What changed this year? Does the treatment make sense? What does the agreement require? Is there something we should be discussing with the client?
Getting through the file is only part of learning
I learned a great deal working on partnership returns. I also spent a great deal of time maintaining the machinery around them.
Understanding why an adjustment is necessary teaches you something. Rebuilding the same adjustment across several workpapers has diminishing returns.
The same is true of allocations. Understanding the economics of a partnership agreement and how they translate into partner results requires real expertise. Maintaining the spreadsheet that implements those results can consume hours of that expertise.
As a new practitioner, those activities are tangled together. You can spend an afternoon making a workbook tie and still struggle to explain what the resulting allocation means for the partners.
Even as I moved into senior and manager roles, there was another version of the same problem: before I could review someone’s work, I had to figure out how their workpapers were organized. That problem follows the work all the way to partner review. Before you can decide whether a treatment is right, you need to understand how the numbers were calculated.
That experience has shaped what I care about as we build Accrual’s 1065 preparation workflow. I want the work to be understandable at every level, from the person opening their first partnership return to the manager reviewing a complicated engagement. A reviewer should be able to see what was prepared, how the calculations were made, and what still requires their judgment, without having to reconstruct the workpapers first.
A different place to start
With Accrual, you begin by bringing the engagement information together: the trial balance, prior-year return and workpapers, fixed asset information, partnership agreement, and relevant client context.
Accrual doesn’t just organize the information. It prepares the work. The workpapers, adjustments, reconciliations, and calculations are prepared from the engagement materials, with open questions and treatment decisions surfaced for review.
That changes the first assignment.
The trial balance has been assembled. Routine AJEs and TJEs have been drafted where the available information supports them. Tax export codes have been assigned, with unresolved items flagged. Reconciliations help show where the numbers tie and where something needs attention.
For allocations, the starting point becomes reviewing the method, supporting agreement, calculations, and partner results. We’ve tested targeted-capital waterfalls on real partnership returns, with the ability to examine the calculations by layer and by partner. A final allocation number isn’t enough for me. I want to know whether the calculation follows the agreement and how it affects each partner.
You are now reviewing the work that used to occupy so many of those first hours.
And when information is missing, it is a specific question to resolve: Who received the guaranteed payments? What happened in this ownership transfer? What additional information do we need from the client?
That is a much more useful starting point than a blank workpaper.
The explanation belongs beside the number
Starting with prepared work raises a fair question: how will newer accountants learn?
I have asked that question myself. We all learned through some combination of repetition, review notes, research, and asking someone more experienced for help.
What excites me is the opportunity to make those learning moments available throughout the work.
Accrual includes explanations of the reasoning behind treatments and issues, with supporting research and authoritative sources. Every number is traceable. A preparer can follow an amount through its calculation and back to the underlying source, inspect the evidence, and understand why it belongs where it does.
Take a guaranteed payment with no identified recipient. Accrual can prepare the allocations it has enough information for and flag what still needs to be resolved. An experienced practitioner may know exactly what to ask. A newer preparer may need to understand why the recipient matters and how the missing information affects the partners’ allocations.
That gives a newer accountant a way into the analysis.
It also gives a manager something better to discuss with them: the reasoning, the assumptions, and whether the facts support the conclusion.
Kristen Keats explores this opportunity in “What happens to a tax firm when the return stops being the job”: people can begin learning through review earlier in their careers. Partnership preparation makes that possibility especially tangible.
A balanced workpaper still needs scrutiny. An explanation still needs to be evaluated. Those are skills we can begin teaching sooner when the supporting work is already available to examine.
Let newer practitioners see the client earlier
One of my favorite parts of the experience is that planning opportunities appear at the beginning.
A preparer can see an overview of the partnership, the significant events of the year, and potential opportunities that deserve investigation. Those ideas become part of their understanding of the engagement while they are working through it.
A transfer of a partnership interest becomes a reason to ask about its implications. A depreciation decision becomes a conversation about the client’s circumstances. A potential election becomes something to investigate with a senior colleague.
The newer practitioner gets to participate in that thinking.
They still need guidance, experience, and review. But they can build those skills through repeated exposure to meaningful questions about actual clients. They can begin connecting the return to the business and the people behind it earlier in their careers.
I wish I had had that starting point.
A career with more room to grow
I think about the person opening their first 1065 today.
There is still an enormous amount to learn. Partnership tax will keep all of us challenged. But, with Accrual, that person can now begin with prepared work, visible reasoning, connected sources, and clear questions to investigate. Their first hours can extend to understanding the client and discussing a treatment with their manager.
That is an exciting prospect for the profession.
We can give experienced practitioners more time to teach and newer practitioners more opportunities to develop judgment. We can spend more of our attention on the questions clients need us to answer. And we can make the early years of a tax career more engaging, with a clearer connection between the work someone does and the expertise they are building.
Taking manual preparation off our plates creates room for all of that.
I’m excited to help build a future where new accountants get to the most meaningful parts of this work sooner...and discover just how far their expertise, curiosity, and judgment can take them.
