What’s New

Amended return checkbox. A checkbox has been added to Schedule K-2 to indicate if the partnership is electronically filing an administrative adjustment request or amended return for Schedule K-2.

Expanded domestic filing exception. The scope of criterion 2 of the domestic filing exception has been broadened. Additionally, the domestic filing exception for criterion 4 no longer requires the partnership to provide Schedule K-3 to a requesting partner in subsequent years unless the partner specifically requests. See Domestic Filing Exception , later.

Small partnership filing exception There is a new exception to filing Schedules K-2 and K-3 based on Form 1065, Schedule B, question 4. See Small Partnership Filing Exception, later.

Schedules K-2 and K-3, Part IV, Section 1. The One Big Beautiful Bill Act (P.L. 119-21) amended section 250 in part by adding to the list of gross income items that are excluded in determining deduction eligible income (DEI). The added exclusion relates to income and gain from the sale or other disposition of intangible property (as defined in section 367(d) (4)), and any other property of a type that is subject to depreciation, amortization, or depletion by the seller. These amendments apply to sales or other dispositions occurring after June 16, 2025.

Schedules K-2 and K-3, Part X, Section 1. Lines 15 and 16 have been revised to allow partnerships to specify other gain and the amount. Lines 19 and 20 have been revised to allow partnerships to specify other income and the amount.