Part II—Amended or Administrative Adjustment Request (AAR) Items for Partnerships…

For information on income, deductions, credits, etc., see the instructions for Form 1065, Schedules K, K-1, K-2, and K-3 for the tax year being amended or otherwise adjusted. See the Instructions for Form 1065 for a list of forms that may be required.

Note: In Part II of Form 1065-X, “see instructions” refers to the instructions for Form 1065 and Schedule K-1, not the Instructions for Form 1065-X.

BBA partnerships filing AARs. A BBA partnership filing an AAR to change items that were reported on its original return must do the following.

Note: Schedules K-1 shouldn’t be included with the AAR. Any information required to be reported is done so on Form 8986 and not Schedule K-1.

b. If pushing out the adjustments to the reviewed year partners, complete Forms 8985 and 8986.

Note: Schedules K-1 shouldn’t be included with the AAR. Any information required to be reported is done so on Form 8986 and not Schedule K-1.

Caution: If the partnership pushes out the adjustments, but the election is determined to be invalid, the partnership remains liable for the IU and such IU

1. Determine the required changes to be made.
2. Complete Form 1065-X to identify the changes being made.

a. On Form 1065-X, check the “BBA AAR” box under Part I. b. See instructions later in this Part II for how to complete columns (a) through (c). 3. Figure an IU and determine if there are any adjustments that don’t result in an IU. If there are adjustments that don’t result in an IU, complete Forms 8985 and 8986. 4. Determine if it will pay the IU or push out the adjustments to the partners.

a. If any modifications are applied to the IU, include a completed Form 8980 with the filing of the AAR. Complete Forms 8985 and 8986 pertaining to the adjustments that don’t result in an IU (if applicable).

6 Instructions for Form 1065-X (Rev. 10-2025)

potentially may be assessed. In such a case where the partnership filed Form 8980 to request permitted modifications be applied to the IU calculation, those modifications will be considered in determining the IU.

5. File Form 1065-X and attach any other supporting documents required, including copies of Forms 8985 and 8986 (if applicable).
6. If applicable, distribute the Forms 8986 to reviewed year partners according to the Form 8986 instructions.

Column (a). Enter the amounts from Form 1065, Schedule K, as originally filed or as previously adjusted. If the return was changed or audited by the IRS (non-BBA partnership only), enter the amounts as adjusted.

Column (b). Enter the net increase or decrease for each line being changed. Enter as a positive the amount by which column (c) exceeds column (a) or enter as a negative the amount by which column (a) exceeds column (c). Use parentheses around all amounts that are negative. Positive amounts are increases and negative amounts are decreases. Explain the increase or decrease in Part V.

Column (c). Enter the correct amount. This will be the sum of column (a) and column (b).

Forms 8985 and 8986 BBA partnerships filing an AAR must furnish a Form 8986 to each reviewed year partner if:

• It makes an election under section 6227(b) to have the adjustments taken into account by the reviewed year partners,

• The adjustments result in an IU of zero or less than zero, or

• The adjustments don’t result in an IU.

Caution: Use Form 8986 to notify partners of their allocable shares of adjustments, don’t use an amended Schedule K-1.

Form 8986 reflects a partner’s share of an adjustment to a PRI. Form 8985 summarizes the information reported on the Forms 8986. Forms 8985 and 8986 are required to be filed with the AAR. For partnerships making an election under section 6227(b)(2), adjustments shown in column (b) of Form 1065-X, Part II, should tie to the adjustments reported in column (g) of Form 8985, Part IV. See the instructions for these forms for further information.

Note: A partnership that makes an election under section 6227(b)(2) to have the reviewed year partners take into account adjustments resulting in an IU doesn’t push out any taxes, penalties, additions to tax, additional amounts, or the amount of any adjustments to any IU previously reported by the partnership for which the partnership is liable under chapter 1 of the Code or the BBA (subchapter C of chapter 63). Instead, the partnership must pay any of these amounts for which the partnership is liable at the time the partnership furnishes statements to its partners.

Amended Schedules K-1—Non-BBA Partnerships Only Non-BBA partnerships must file amended Schedules K-1 with Form 1065-X and furnish copies of the amended Schedules K-1 to the partners.

Amended or Corrected Schedules K-2 and K-3 for Tax Years Beginning on or After January 1, 2021

Non-BBA partnership filing an amended return. Attach the amended Schedule K-2 with the “Amended K-2” box checked on line D or (for years prior to 2025) with “As Amended” written at the top of the Schedule K-2. Attach the amended Schedules K-3 with the amended box checked on each. The partnership must furnish the amended Schedules K-3 to its partners.

BBA partnerships filing AARs. When a BBA partnership files an AAR and needs to make its partners aware of their allocable share of adjustments, it shouldn’t file an amended Schedule K-2 or Schedules K-3. Instead, it must file Forms 8985 and 8986 with the AAR to report the changes to the Schedules K-2 and K-3. The BBA partnership must also furnish Forms 8986 to its partners. See the instructions for Forms 8985 and 8986. Also see the Instructions for Form 8986 for examples of how Schedule K-3 adjustments should be reported. The related Schedule K-2 adjustments should be reported in the same manner.