The IRS explained that the proposed parts included in new Schedule K-2 (Form 1065) would replace portions of existing Form 1065, Schedule K, lines 16(a) through 16(r).The proposed changes are intended to ease this burden through a standard format that offers greater clarity to both partnerships and their partners.Īccording to the IRS, the standard format of the new partnership schedules would “…better align the information that partnerships provide on the schedules with the tax forms used by partners, allowing partners to more easily prepare their tax returns and the IRS to more efficiently verify taxpayer compliance.” Those statements are compiled in a variety of formats and may be difficult for partners to translate onto their own returns. Partners generally obtain the information required to be reported from their partnerships, usually through narrative statements attached to Schedules K-1. The proposed changes would not affect domestic partnerships with no items of international tax relevance.Ĭomments are requested and are due by September 14, 2020.Īs explained in a related IRS release- IR-2020-155 (July 14, 2020)-partners are currently required to report international tax information on their tax returns on several tax forms and schedules. The changes would apply to partnerships that are required to file Form 1065, but only if the partnership has items of international tax relevance (generally foreign activities or foreign partners). Form 1065, Schedule K-3 and Instructions.Form 1065, Schedule K-2 (PDF) and Instructions.Read the draft forms and draft instructions (showing a “watermark” date of July 8 or July 9, 2020):
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The IRS also stated that the proposed redesigned form and instructions would guide partnerships on how to provide international tax information to their partners. income tax liability with respect to international tax matters, including how to compute deductions and credits.
Persons With Respect to Certain Foreign Partnerships.Īccording to a release on the IRS website, the updates to Form 1065 are intended to provide greater clarity for partners on how to compute their U.S. Income Tax Return for an S Corporation, and Form 8865, Return of U.S. Similar form updates are intended for Form 1120-S, U.S.
Return of Partnership Income, for tax year 2021 (filing season 2022). The IRS is proposing changes to Form 1065, U.S.
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