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Foreign Tax Credit—Corporations, and its

items from other sources) to prepare your

the partnership are not deductible on your

instructions; and Pub. 514, Foreign Tax

Form 6251, Alternative Minimum

tax return. Decrease the adjusted basis of

Credit for Individuals.

Tax—Individuals; Form 4626, Alternative

your interest in the partnership by this

Minimum Tax—Corporations; or Schedule I

amount.

Codes O and P. Extraterritorial income

(Form 1041), Alternative Minimum

exclusion.

Tax—Estates and Trusts.

Box 19. Distributions

1. Partnership did not claim the

A partner that is a corporation

exclusion. If the partnership reports your

subject to alternative minimum tax

Code A. Cash and marketable securities.

share of foreign trading gross receipts (code

TIP

must notify the partnership of its

Code A shows the distributions the

O) and the extraterritorial income exclusion

status.

partnership made to you of cash and certain

(code P), the partnership wasn't entitled to

marketable securities. The marketable

claim the exclusion because it didn't meet

Code A. This amount is your share of the

securities are included at their fair market

the foreign economic process requirements.

partnership's post-1986 depreciation

value (FMV) on the date of distribution

You may still qualify for your share of this

adjustment. If you are an individual partner,

(minus your share of the partnership's gain

exclusion if the partnership's foreign trading

report this amount on line 18 of Form 6251.

on the securities distributed to you). If the

gross receipts for the tax year were $5

amount shown as code A exceeds the

million or less. To qualify for this exclusion,

Code B. This amount is your share of the

adjusted basis of your partnership interest

your foreign trading gross receipts from all

partnership's adjusted gain or loss. If you are

immediately before the distribution, the

sources for the tax year also must have been

an individual partner, report this amount on

excess is treated as gain from the sale or

$5 million or less. If you qualify for the

line 17 of Form 6251.

exchange of your partnership interest.

exclusion, report the exclusion amount in

Code C. This amount is your share of the

Generally, this gain is treated as gain from

accordance with the instructions for Income

partnership's depletion adjustment. If you are

the sale of a capital asset and should be

(Loss), earlier, for box 1, 2, or 3, whichever

an individual partner, report this amount on

reported on Form 8949 and the Schedule D

applies. See Form 8873, Extraterritorial

line 9 of Form 6251.

for your return. However, if you receive cash

Income Exclusion, for details.

or property in exchange for any part of a

Codes D and E. Oil, gas, & geothermal

2. Partnership claimed the exclusion. If

partnership interest, the amount of the

properties—gross income and deduc-

the partnership reports your share of foreign

distribution attributable to your share of the

tions. The amounts reported on these lines

trading gross receipts but not the amount of

partnership's unrealized receivable or

include only the gross income (code D) from,

the extraterritorial income exclusion, the

inventory items results in ordinary income

and deductions (code E) allocable to, oil,

partnership met the foreign economic

(see Regulations section 1.751-1(a) and

gas, and geothermal properties included in

process requirements and claimed the

Sale or Exchange of Partnership Interest,

box 1 of Schedule K-1. The partnership

exclusion when figuring your share of

earlier). For details, see Pub. 541.

should have attached a statement that

partnership income. You also may need to

The partnership will separately identify

shows any income from or deductions

know the amount of your share of foreign

both of the following.

allocable to such properties that are included

trading gross receipts from this partnership

The FMV of the marketable securities

in boxes 2 through 13, 18, and 20 of

to determine if you met the $5 million or less

when distributed (minus your share of the

Schedule K-1. Use the amounts reported

exception discussed above for purposes of

gain on the securities distributed to you).

and the amounts on the attached statement

qualifying for an extraterritorial income

The partnership's adjusted basis of those

to help you figure the net amount to enter on

exclusion from other sources.

securities immediately before the

line 26 of Form 6251.

Upon request, the partnership

distribution.

Code F. Other AMT items. Enter the

should furnish you a copy of the

TIP

Decrease the adjusted basis of your

information on the statement attached by the

partnership's Form 8873 if there is a

interest in the partnership (but not below

partnership on the applicable lines of Form

reduction for international boycott

zero) by the amount of cash distributed to

6251, Form 4626, or Schedule I (Form

operations, illegal bribes, kickbacks, and

you and the partnership's adjusted basis of

1041).

other payments.

the distributed securities. Advances or

drawings of money or property against your

Code Q. Other foreign transactions. On

Box 18. Tax-Exempt

share are treated as current distributions

a statement attached to Schedule K-1, the

made on the last day of the partnership's tax

Income and Nondeductible

partnership will report any other information

year.

on foreign transactions that you may need

Expenses

Your basis in the distributed marketable

using code Q.

securities (other than in liquidation of your

The partnership will attach a statement

Code A. Tax-exempt interest income.

interest) is the smaller of:

that separately identifies any arrangement,

Report on your return, as an item of

The partnership's adjusted basis in the

along with the taxes paid or accrued in

information, your share of the tax-exempt

securities immediately before the distribution

connection with the arrangement, in which

interest received or accrued by the

increased by any gain recognized on the

the partnership participates that would

partnership during the year. Individual

distribution of the securities, or

qualify as a splitter arrangement under

partners include this amount on Form 1040,

The adjusted basis of your partnership

section 909 if one or more partners are

line 8b. Increase the adjusted basis of your

interest reduced by any cash distributed in

covered persons regarding an entity that

interest in the partnership by this amount.

the same transaction and increased by any

took into account related income from the

Code B. Other tax-exempt income.

gain recognized on the distribution of the

arrangement. The statement will also

Increase the adjusted basis of your interest

securities.

indicate whether the partnership has taken

in the partnership by the amount shown, but

If you received the securities in liquidation

into account any related income from any

do not include it in income on your tax return.

of your partnership interest, your basis in the

such splitter arrangement. See section 909

marketable securities is equal to the

and the related regulations for rules

The partnership will attach a

adjusted basis of your partnership interest

regarding splitter arrangements.

statement for the amount included

TIP

reduced by any cash distributed in the same

under code B that is exempt by

transaction and increased by any gain

reason of section 892 and describe the

Box 17. Alternative

recognized on the distribution of the

nature of the income.

securities.

Minimum Tax (AMT) Items

Code C. Nondeductible expenses. The

Code B. Distribution subject to section

Use the information reported in box 17 (as

nondeductible expenses paid or incurred by

737. If a partner contributed section 704(c)

well as your adjustments and tax preference

Partner's Instructions for Schedule K-1 (Form 1065)

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Partner'S Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Deductions, Credits, Etc. (For Partner'S Use Only) - 2016 Page 13

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