Looking for a Schedule K-1 Templates? Download it for free!

2 0

Department of the Treasury

Internal Revenue Service

Partner’s Instructions for

Schedule K-1 (Form 1065)

Partner’s Share of Income, Credits, Deductions, etc.

(For Partner’s Use Only)

Section references are to the Internal Revenue Code unless otherwise noted.

If you are required to file Form 8082

If a partner is required to notify the

General Instructions

but fail to do so, you may be subject to

partnership of a section 751(a) exchange

the accuracy-related penalty. This penalty

but fails to do so, a $50 penalty may be

Purpose of Schedule K-1

imposed for each such failure. However,

is in addition to any tax that results from

no penalty will be imposed if the partner

making your amount or treatment of the

The partnership uses Schedule K-1 to

can show that the failure was due to

item consistent with that shown on the

report your share of the partnership’s

reasonable cause and not willful neglect.

partnership’s return. Any deficiency that

income, credits, deductions, etc. Keep it

results from making the amounts

for your records. Do not file it with

Nominee Reporting

consistent may be assessed immediately.

your tax return. The partnership has filed

a copy with the IRS.

Any person who holds, directly or

Errors

indirectly, an interest in a partnership as a

Although the partnership generally is

nominee for another person must furnish

not subject to income tax, you are liable

If you believe the partnership has made

a written statement to the partnership by

for tax on your share of the partnership

an error on your Schedule K-1, notify the

the last day of the month following the

income, whether or not distributed.

partnership and ask for a corrected

end of the partnership’s tax year. This

Include your share on your tax return if a

Schedule K-1. Do not change any items

statement must include the name,

return is required. Use these instructions

on your copy of Schedule K-1. Be sure

address, and identifying number of the

to help you report the items shown on

that the partnership sends a copy of the

nominee and such other person,

Schedule K-1 on your tax return.

corrected Schedule K-1 to the IRS. If you

description of the partnership interest held

are a partner in a partnership that does

The amount of loss and deduction that

as nominee for that person, and other

not meet the small partnership exception

you may claim on your tax return may be

information required by Temporary

and you report any partnership item on

less than the amount reported on

Regulations section 1.6031(c)-1T. A

your return in a manner different from the

Schedule K-1. It is the partner’s

nominee that fails to furnish this

way the partnership reported it, you must

responsibility to consider and apply

statement must furnish to the person for

file Form 8082.

any applicable limitations. See

whom the nominee holds the partnership

Limitations on Losses, Deductions,

interest a copy of Schedule K-1 and

and Credits beginning on page 2 for

Sale or Exchange of

related information within 30 days of

more information.

receiving it from the partnership.

Partnership Interest

Where “attach schedule” appears

A nominee who fails to furnish when

Generally, a partner who sells or

beside a line item on Schedule K-1, see

due all the information required by

exchanges a partnership interest in a

either the schedule that the partnership

Temporary Regulations section

section 751(a) exchange must notify the

has attached for that line or line 25 of

1.6031(c)-1T, or who furnishes incorrect

partnership, in writing, within 30 days of

Schedule K-1.

information, is subject to a $50 penalty for

the exchange (or, if earlier, by January 15

each statement for which a failure occurs.

Inconsistent Treatment of

of the calendar year following the

The maximum penalty is $100,000 for all

calendar year in which the exchange

Items

such failures during a calendar year. If the

occurred). A “section 751(a) exchange” is

nominee intentionally disregards the

any sale or exchange of a partnership

Generally, you must report partnership

requirement to report correct information,

items shown on your Schedule K-1 (and

interest in which any money or other

each $50 penalty increases to $100 or, if

any attached schedules) the same way

property received by the partner in

greater, 10% of the aggregate amount of

that the partnership treated the items on

exchange for that partner’s interest is

items required to be reported, and the

its return. This rule does not apply if your

attributable to unrealized receivables (as

$100,000 maximum does not apply.

partnership is within the “small

defined in section 751(c)) or inventory

partnership exception” and does not elect

items (as defined in section 751(d)).

International Boycotts

to have the tax treatment of partnership

The written notice to the partnership

items determined at the partnership level.

Every partnership that had operations in,

must include the names and addresses of

or related to, a boycotting country,

If the treatment on your original or

both parties to the exchange, the

company, or a national of a country must

amended return is inconsistent with the

identifying numbers of the transferor and

file Form 5713, International Boycott

partnership’s treatment, or if the

(if known) of the transferee, and the

Report.

partnership was required to but has not

exchange date.

filed a return, you must file Form 8082,

If the partnership cooperated with an

Notice of Inconsistent Treatment or

An exception to this rule is made for

international boycott, it must give you a

sales or exchanges of publicly traded

Administrative Adjustment Request

copy of its Form 5713. You must file your

partnership interests for which a broker is

(AAR), with your original or amended

own Form 5713 to report the partnership’s

return to identify and explain any

required to file Form 1099-B, Proceeds

activities and any other boycott

From Broker and Barter Exchange

inconsistency (or to note that a

operations that you may have. You may

Transactions.

partnership return has not been filed).

lose certain tax benefits if the partnership

Cat. No. 11396N

Partner'S Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Credits, Deductions, Etc. (For Partner'S Use Only) - 2002

Related Articles

Related forms

Related Categories