Schedule G (Form 8865). Statement of Application of the Gain Deferral Method Under…

A U.S. transferor uses Schedule G to comply with the reporting requirements that must be satisfied in applying the gain deferral method. If the gain deferral method is applied to section 721(c) property, a U.S. transferor must file Schedule G for the tax year of a gain deferral contribution, as well as for each subsequent tax year to which the gain deferral method is applied to section 721(c) property, even if the gain deferral contribution for that property occurred before 2018. See Regulations sections 1.721(c)-6(b)(2) and (3). See Gain deferral method, Gain deferral contribution, and Section 721(c) property , earlier.

Filing Year Check the box for “Tax year of gain deferral contribution” if your tax year is a year in which a gain deferral contribution occurred (a gain deferral contribution year). Check the “Annual reporting” box if a gain deferral contribution occurred in a year prior to the current tax year and, in the current tax year, the gain deferral method applies to section 721(c) property contributed in the prior gain deferral contribution (an annual reporting year). If the tax year is both a gain deferral contribution year and an annual reporting year, both boxes should be checked.

General Instructions On Schedule G, information must be provided for section 721(c) property that was (a) contributed to the partnership in a gain deferral contribution that occurred during the current tax year; or (b) contributed to the partnership in a gain deferral contribution that occurred during a prior tax year, provided that the gain deferral method is applied to the property in the current tax year. Collectively, section 721(c) property for which information must be reported on Schedule G is referred to as “reportable section 721(c) properties.” See Section 721(c) property, earlier.

In Parts I through V, information must be provided on a property-by-property basis. In Part I, reportable section 721(c) properties and accompanying information must be listed in descending order of FMV (measured at the time of contribution). Thus, the reportable section 721(c) property with the highest FMV should be listed on line 1, the reportable section 721(c) property with the second highest FMV should be listed on line 2, and so on.

In Parts II through IV, the line on which information is provided for a reportable section 721(c) property must correspond to the line on which the property is listed in Part I. Thus, in Parts II through IV, line 1 corresponds to Part I, line 1, and line 2 corresponds to Part I, line 2, and so on.

If there are more than four reportable section 721(c) properties, in Parts I through IV, attach a statement using the same format as in Parts I through IV, listing properties, or information for properties, in the same manner as described in the preceding two paragraphs. For example, the first line on the statement for Part I must be labeled “5” and contain columns with the same information as those

Instructions for Form 8865 (2025) 11

in Part I, and must list the reportable section 721(c) property with the fifth-highest FMV. The statements for Parts I through IV may be combined in a single attached statement, provided that the format described above is followed.

A U.S. transferor should complete and file only one Schedule G for each partnership. See U.S. transferor , earlier.