Schedule B. Income Statement—Trade or Business Income

Important: All Category 1 filers in partnerships engaged in a domestic or foreign trade or business must complete Form 8865, Schedule B.

If the partnership is a section 721(c) partnership and the gain deferral method is applied, Schedule B must include any remedial items for section 721(c) property, including an offsetting remedial item relating to contributed section 197(f)(9) property. See Regulations sections 1.704-3(d) and 1.704-3(d)(5)(iii). The total net amount of remedial allocations should be included on line 7, “Other income (loss).” Attach a detailed statement describing the remedial items allocated to each partner during the tax year for section 721(c) property. See Regulations section 1.721(c)-3. See Section 721(c) partnership , Section 721(c) property , and Gain deferral method , earlier.

Specific Instructions for Schedule B For specific instructions for Form 8865, Schedule B, use the instructions for Form 1065, lines 1a through 21 (income and deductions).

Tip: You can view or download the Instructions for Form 1065 at IRS.gov/Form1065 . Also, these instructions can be ordered by calling 800-829-3676 (800-TAX-FORM).