Specific Instructions (Schedule K-1 Only)

General Information Generally, the partnership is required to prepare and give a Schedule K-1 to each person who was a partner in the partnership at any time during the year. Schedule K-1 must be provided to each partner on or before the day on which the partnership return is required to be filed.

However, a foreign partnership that has one or more U.S. partners must file Form 1065. But if it meets each of the following four requirements, it isn’t required to file or provide Schedules K-1 for foreign partners (unless the foreign partner is a pass-through entity through which a U.S. person holds an interest in the foreign partnership).

• The partnership had no gross income effectively connected with the conduct of a trade or business within the United States during its tax year.

• The partnership isn’t a withholding foreign partnership as defined in Regulations section 1.1441-5(c)(2)(i).

• All required Forms 1042 and 1042-S were filed by the partnership or another withholding agent as required by Regulations sections 1.1461-1(b) and (c).

• The tax liability for each foreign partner for amounts reportable under Regulations sections 1.1461-1(b) and (c) has been fully satisfied by the withholding of tax at the source.

Generally, any person who holds an interest in a partnership as a nominee for another person must furnish to the partnership the name, address, etc., of the other person.

If a married couple each had an interest in the partnership, prepare a separate Schedule K-1 for each of them.

How To Complete Schedule K-1

Caution: In order to enable accurate scanning and processing of Schedule(s) K-1, use a 10-point Helvetica Light Standard font for all entries on Schedules K-1 if the entries are typed or made using a computer.

If the return is for a fiscal year or a short tax year, fill in the tax year space at the top of each Schedule K-1. On each Schedule K-1, enter the information about the partnership and the partner in Parts I and II (items A through N). In Part III, enter the partner’s distributive share of each item of income, deduction, and credit and any other information the partner needs to file the partner’s tax return, including information needed to prepare state and local tax returns.

Codes. In box 11, boxes 13 through 15, and boxes 17 through 20, identify each item by entering a code in the column to the left of the entry space for the dollar amount. These codes are identified in these instructions and on the List of Codes in the Partner’s Instructions for Schedule K-1 (Form 1065).

Attached statements. When attaching statements to Schedule K-1 to report additional information to the partner, indicate there’s a statement for the following.

• If an amount can be input on Schedule K-1 but additional information is required, enter an asterisk (*) after the code in the column to the left of the entry space.

• For items that can’t be reported as a single dollar amount, enter the code and an asterisk (*) in the column to the left and enter “STMT” in the right column to indicate that the information is provided on an attached statement.

• If the partnership has more coded items than the number of entry boxes (for example, box 11, boxes 13 through 15, or boxes 17 through 20), don’t enter a code or dollar amount in the last entry box. Instead, enter an asterisk (*) in the left column and enter “STMT” in the entry space to the right.

More than one attached statement can be placed on the same sheet of paper. The information included in the statement should be identified in alphanumeric order by box number followed by the letter code (if any), description, and dollar amount for each item. For example: “Box 13, code J—Section 59(e)(2) expenditures—$1,000.” This can be followed with any additional information the partner needs to determine the proper tax treatment of the item.

Section 721(c) partnerships. When the gain deferral method, as described in Regulations section 1.721(c)-3, is being applied, a partnership that is a section 721(c) partnership will attach to the Schedule K-1 provided to a U.S. transferor the information required under Regulations sections 1.721(c)-6(b)(2) and (3). A partnership that is a section 721(c) partnership will also attach to its Form 1065 a Schedule K-1 for each partner that is a related foreign person with respect to the U.S. transferor. For an indirect partner that is a related foreign person with respect to the U.S. transferor, the Schedule K-1 will only include relevant information with respect to section 721(c) property. See Regulations section 1.721(c)-1 for definitions.