Part V of Schedules K-2 and K-3. Used to report

information the partner needs, in combination with other information known to the partner, to determine the amount of each distribution from a foreign corporation that is treated as a dividend or excluded from gross income because the distribution is attributable to previously taxed earnings and profits (PTEP) in the partner’s annual PTEP accounts for the foreign corporation,

Corrections to Form 8865, Schedule K-2 and K-3. If you file a Schedule K-2 and/or K-3 that you later determine is incomplete or incorrect, file a corrected Schedule K-2 and/or K-3 with an amended tax return following the instructions for the return with which you originally filed Form 8865. Enter “corrected” at the top of the form and attach a statement identifying and explaining the changes.

Caution. If the information required in a given section exceeds the space provided within that section, don’t enter “See attached” in the section or leave the section blank. Instead, complete all entry spaces in the section and attach the remaining information on additional sheets. For all attachments, include the part, section, line number, and column of the relevant portion of Schedule K-2 and Schedule K-3. The additional sheets must conform to the IRS version of that section.

Schedule K-2, Identifying Information At the top of each new page, enter the name of the partnership as it appears on Form 8865.

If the foreign partnership has an employer identification number (EIN), enter the EIN as it appears on Form 8865 at the top of each new page. Don’t enter “FOREIGNUS” or “APPLIED FOR.” Enter the reference ID number used on Form 8865, item G2(b). For details, see the instructions for Form 8865, item G2(b). Don’t enter “FOREIGNUS” or “APPLIED FOR” for the reference ID number.

Item A—Part applicability. Check the “Yes” box to indicate the applicable parts of Schedules K-2 and K-3. Complete and attach each applicable part to the Form 8865 and the Schedule K-1 (Form 8865), respectively.

Check the “No” box to indicate the inapplicable parts of Schedules K-2 and K-3. Don’t complete and attach the inapplicable parts to the Form 8865 and the Schedule K-1 (Form 8865), respectively.

Schedule K-3, Identifying Information

Items A and B. Items A and B should be the same as reported on Schedule K-1, Part I, items A1 or A2 and B. Enter the

2 Inst. for Schedules K-2 and K-3 (Form 8865) (2025)

information reported on Schedule K-1, Part I, item A1. If there is no entry in item A1, then enter the information in item A2.

Items C and D. Items C and D should be the same as reported on Schedule K-1, Part II, items C and D1.

Item E. Item E should correspond to Schedule K-2, Identifying Information, item A.

Schedule K-2, Part I (Partnership’s Other Current Year International Information); and Schedule K-3, Part I (Partner’s Share of Partnership’s Other Current Year International Information) This part is used to report information for international tax items not reported elsewhere on the Schedule K-2. Check the box to indicate whether any of the following international tax items are applicable in the tax year. If applicable, attach statements, as described below, to the Schedule K-2.

If applicable, also complete Schedule K-3, Part I, and include with the Schedule K-3 the attachment(s) as described below with the partner’s distributive share of the amounts.

Box 1. Gain on personal property sale. In general, income from the sale of personal property is sourced according to the residence of the seller. See section 865(a). For sourcing purposes, personal property sold by the partnership is treated as sold by the partners. See section 865(i)(5). A U.S. citizen or resident alien individual with a tax home (as defined in section 911(d)(3)) in a foreign country is treated as a nonresident for the sale of personal property only if an income tax of at least 10% of the gain derived from the sale is actually paid to a foreign country for that gain. See section 865(g). In addition, with the exception of certain property sales, if a U.S. resident maintains an office or other fixed place of business in a foreign country, income from the sale of personal property attributable to such office or other fixed place of business is foreign source only if an income tax of at least 10% of the income from the sale is actually paid to a foreign country for such income.

If the partnership has income from the sale of personal property (other than inventory, depreciable personal property, and certain intangible property excepted from the general rule of section 865(a)), and the partnership pays income tax to a foreign country for income from the sale or the income is eligible for resourcing under an applicable treaty, check box 1 and attach a statement to Schedules K-2 and K-3 (for distributive share) with Table 1.

The partnership may combine sales of stock property by country. Otherwise, don’t combine sales of property. Each item of property sold must be listed separately with the information shown in Table 1. If the gain is capital, enter “long-term” or “short-term” in column (b). Enter the two-letter code from the list at IRS.gov/CountryCodes in column (f). Don’t enter “various” or “OC” for the country code. If the property sale is taxed by more than one country, complete a separate line for that country, but indicate in some manner (for example, a footnote) that the property entered on both lines is the same property.

Box 2. Foreign oil and gas taxes. A separate foreign tax credit limitation is applied for foreign oil and gas taxes. See section 907(a) and Regulations section 1.907(a)-1 for details. If the partnership has such taxes, check box 2 and attach a completed Schedule I (Form 1118) to the Schedules K-2 and K-3 (with the partner’s distributive share). Don’t complete Schedule I (Form 1118), Part I, columns 12 and 13; or Part III, lines 1 and 3. Attach Schedule I (Form 1118) even if there are no corporate partners because the limitation applies to individuals eligible to claim a foreign tax credit.

Box 3. Splitter arrangements. Foreign income taxes for a foreign tax credit splitting event are suspended until the related income is taken into account by the taxpayer. See section 909. There is a foreign income tax credit splitting event for foreign taxes of a payor if in connection with a splitter arrangement, as defined in Regulations section 1.909-2(b), the related income was, is, or will be taken into account by a covered person. See Regulations section 1.909-2(a). A covered person, as defined in Regulations section 1.909-1(a)(4), includes, for example, any entity in which the payor holds, directly or indirectly, at least a 10% ownership interest (determined by vote or value). A payor, as defined in Regulations section 1.909-1(a)(3), includes, for example, a person that takes foreign income taxes paid or accrued by a partnership into account pursuant to section 702(a) (6).

Report foreign income taxes that are potentially suspended on Schedule K-2, Part III, Section 4, line 2E, and each partner’s share of such taxes on Schedule K-3, Part III, Section 4, line 2E. It may not be possible to determine whether taxes are suspended and whether related income is taken into account. However, where it is possible to determine that taxes are potentially suspended, or potentially unsuspended, the partnership must report such taxes and the information requested in these instructions for box 3.

For example, where a partnership owns a reverse hybrid and the foreign country assesses tax on the partnership for income earned by the reverse hybrid, such taxes are potentially suspended taxes.

Check box 3 and attach a statement to Schedules K-2 and K-3 that includes the following for each splitter arrangement in which the partnership participates that would qualify as a splitter arrangement under section 909 if one or more partners are covered persons for an entity that took into account related income from the arrangement.

Section 1 of attached statement—Potentially suspended taxes.

1. Explanation of the splitter arrangement (for example, reverse hybrid owned by partnership).

2. Amount of taxes paid or accrued by the partnership in connection with the splitter arrangement.

3. Amount of related income on which such taxes were paid or accrued.

4. The two-letter code for the country to which the taxes were paid or accrued from the list at IRS.gov/CountryCodes . Don’t enter “various” or “OC” for the country code.

Table 1. Information on Personal Property Sold (For use with Schedule K-2 (Form 8865), Part I, box 1) (Also for use with Schedule K-3 (Form 8865), Part I, box 1)

(a) Property description (b) Long-term/short-term (c) Gains (d) Amount of tax paid

in local currency

(e) Amount of tax paid in U.S.

dollars

(f) Taxing country

(enter two-letter

country code)

Inst. for Schedules K-2 and K-3 (Form 8865) (2025) 3

5. The separate category and source of income to which the taxes are assigned.

Section 2 of attached statement—Potentially unsuspended taxes. Include a separate section that reports the following for each splitter arrangement for which the partnership has taken into account any related income.

1. Origin year of the splitter arrangement.

2. Explanation of the splitter arrangement (for example, reverse hybrid owned by partnership).

3. Amount of taxes paid or accrued by the partnership in connection with the splitter arrangement in the origin year of the splitter arrangement.

4. Amount of related income on which such taxes were paid or accrued in the origin year of the splitter arrangement.

5. The two-letter code for the country to which the taxes were paid or accrued from the list at IRS.gov/CountryCodes . Don’t enter “various” or “OC” for the country code.

6. The separate category and source of income to which the taxes are assigned.

7. Amount of related income taken into account in the current tax year and the amount of taxes originally paid that relate to that portion of the related income.

Box 4. Foreign tax translation. If any foreign taxes are reported on Schedules K-2 and K-3, Part III, Section 4, check the box for item 4 and attach to Schedules K-2 and K-3 the statement described in the instructions for those sections.

Box 5. High-taxed income. If the partnership has passive income, check the box for item 5 and attach a statement to Schedules K-2 and K-3 with Attachment 1 or 2, or both, completed. This information helps to determine whether a partner’s passive income is high-taxed passive income.

Income received or accrued by a U.S. person that would otherwise be passive income isn’t treated as passive income if

the income is determined to be high-taxed income. See section 904(d)(2)(B)(iii)(II). To determine if income is high-taxed income, a partner must group its shares of items of passive income from a partnership according to the rules in Regulations sections 1.904-4(c)(3) and (4).The grouping rules of paragraph (c)(3) apply separately to income attributable to each foreign qualified business unit (QBU) as defined in section 989(a) of a foreign partnership.

Note: Passive income isn’t treated as subject to a withholding tax or other foreign tax when a credit is disallowed in full for such foreign tax, for example, under section 901(k).

Example 1. Part I, box 5: high-taxed income. In Year 1, FP, a foreign partnership, has two domestic corporate partners with equal interests in the partnership. In Year 1, FP receives $100 of passive dividend income from a noncontrolled 10%-owned foreign corporation subject to a 15% withholding tax. FP also receives $150 of passive interest income from an unrelated person subject to a 30% withholding tax. FP incurs $80 of expenses that are allocable to the interest income. FP also receives $50 of passive dividend income from a controlled foreign corporation (CFC) which isn’t subject to tax. No expenses are allocable to the dividend income. FP’s branch operation in Country X, that is treated as a QBU under section 989(a), receives $100 of passive dividend income subject to a 15% withholding tax. Finally, FP earns $400 of passive income for its branch operation in Country X. Such income is subject to foreign tax (but not withholding tax) of $40. Expenses of $120 are allocable to the distributive share of branch income. No expenses are allocable to the dividend income.

For Year 1, the U.S. person filing Form 8865 checks box 5 in Part I of Schedule K-2 (Form 8865) and attaches Attachments 1 and 2 to Schedule K-2.

FP’s owner completes the same attachments with the distributive shares and attaches those attachments to each Schedule K-3.

4 Inst. for Schedules K-2 and K-3 (Form 8865) (2025)

Example 1. Attachment 1

Reference: Regulations section 1.904-4(c)(3)

A Passive income subject to withholding tax of 15% or more

B Passive income subject to withholding tax of less than 15% but greater than zero

C Passive income not subject to any foreign tax

D Passive income subject to no withholding tax, but subject to other foreign tax

Example 1. Attachment 2

Reference: Regulations section 1.904-4(c)(4)

A Name of foreign QBU: Country X QBU

I. Passive Income Net of Allocable

Expenses

II. Taxes

$170 $60

0 0

$50 0

0 0

(Complete a separate Attachment 2 for each foreign QBU)

I. Passive Income Net of Allocable Expenses II. Taxes

B Passive income subject to withholding tax of $100 $15 15%

C Passive income subject to withholding tax of less than 15% but greater than zero

0 0

D Passive income not subject to any foreign tax 0 0

E Passive income subject to no withholding tax, but subject to other foreign tax

Box 6. Section 267A disallowed deduction. Check box 6 if the partnership paid or accrued any interest or royalty for which the U.S. person filing the Form 8865 knows, or has reason to know, that one or more of the partnership’s partners aren’t allowed a deduction under section 267A. In addition, on Schedule K-3 filed for such partners, the U.S. person filing Form 8865 should check box 6 in Part I and attach to the Schedule K-3 a statement titled "Section 267A Disallowed Deduction" that separately lists the following information.

A. The amount of interest paid or accrued by the partnership for which the partner isn’t allowed a deduction under section 267A. B. The amount of royalty paid or accrued by the partnership for which the partner isn’t allowed a deduction under section 267A. C. The extent to which information reported on other parts of the Schedule K-3 (for example, a line in Part II, Section 2) reflects interest or royalty for which the partner isn’t allowed a deduction under section 267A. Caution. When completing other parts of Schedules K-2 and K-3 (for example, a line in Part II, Section 2), list an amount without regard to whether the partner is disallowed a deduction under section 267A for the amount.

Note for boxes 8 and 9: If the Form 8865 filer meets an exception, such as the multiple filer exception, to filing Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, the filer isn’t required to complete and attach that form. However, the filer must still attach to the tax return of the U.S. person filing Form 8865 any required statements to qualify for the exception to filing the Form 5471.

$280 $40

Box 8. Form 5471 information. If applicable, check box 9 and attach to Form 8865 and Schedule K-3 any Forms 5471. See the Partnership Instructions for Schedules K-2 and K-3 (Form 1065) for applicability.

Box 9. Other forms. If any other international tax forms are applicable, check box 9 and attach the form(s) to Form 8865 and Schedule K-3. See the Partnership Instructions for Schedules K-2 and K-3 (Form 1065) for applicability.

Box 10. Partner loan transactions. Check this box and append the completed attachment to Schedules K-2 and K-3 if either the partnership (a) received a loan from its partner (or a member of the partner’s affiliated group) (“downstream loan”), as described in Regulations section 1.861-9(e)(8); or (b) loaned an amount to its partner (or a member of the partner’s affiliated group) (“upstream loan”), as described in Regulations section 1.861-9(e)(9). Downstream loans. On an attached statement, provide the details of any downstream loans from a partner or a member of the partner’s affiliated group, including the amount of interest expense paid or accrued by the partnership. Report the information separately for each separate loan. The reporting should be as follows in Table 2.

Table 2. Downstream Loans

Name of

Lender

Lender’s

TIN

Date

of Loan

Amount

of Loan

Interest Expense

for the

Year

Inst. for Schedules K-2 and K-3 (Form 8865) (2025) 5

If there are any partners in the same affiliated group as the lender, attach a statement to each of the Schedules K-2 and K-3 to expand the columns in the table to include the information requested in the first two columns for each such partner.

Upstream loans. On the attached statement, provide the details for any upstream loans to its partner or a member of the partner’s affiliated group, including the amount of interest income received or accrued by the partnership. Report the information separately for each separate loan. The reporting should be as follows in Table 3.

Table 3. Upstream Loans

Name of Borrower

Borrower’s

TIN

Date

of Loan

Amount

of Loan

Interest

Income

for the

Year

If there are any partners in the same affiliated group as the borrower, attach a statement to each of the Schedules K-2 and K-3 to expand the columns in the table to include the information requested in the first two columns for each such partner.

Box 11. Dual consolidated loss. Check box 11 if either (a) the partnership directly or indirectly owns a foreign branch (as defined in Temporary Regulations section 1.367(a)-6T(g)) or an interest in a hybrid entity (as defined in Regulations section 1.1503(d)-1(b)(3)), or (b) the partnership is a hybrid entity (as defined in Regulations section 1.1503(d)-1(b)(3)). However, box 11 should not be checked if neither the U.S. person filing Form 8865 nor any partner for which a Schedule K-3 is filed is a domestic corporation (other than a regulated investment company (RIC), a real estate investment trust (REIT), or an S corporation). A domestic corporate partner’s interest in the partnership or its indirect interest in a foreign branch or hybrid entity may be treated as a separate unit and subject to the dual consolidated loss (DCL) rules pursuant to Regulations sections 1.1503(d)-1 through -8.

Box 12. Other international items. If the partnership has transactions, income, deductions, payments, or anything else that is impacted by the international tax provisions of the Code and such events aren’t otherwise reported on this part or other parts of Schedules K-2 and K-3, report that information on a statement attached to Schedules K-2 and K-3 and check box 12.

with respect to CFCs, foreign tax credits, or foreign parented multinational groups to determine the partner’s liability under section 55(a)(2) and such information is not specifically required to be reported on the Schedule K-3, such information should be provided by the partnership to the partner.

Global Anti-Base Erosion (GloBE) Model (Pillar Two) infor- mation for partners. Certain jurisdictions have enacted legislation to implement the GloBE Model Rules for the IIR, qualified domestic minimum top-up tax (QDMTT), and UTPR. See Organisation for Economic Co-operation and Development’s (OECD) document, Tax Challenges Arising from the Digitalisation of the Economy–Global Anti-Base Erosion Model Rules (Pillar Two) (Dec. 14, 2021), copy and paste this link to your browser, https://www.oecd-ilibrary.org/taxation/ tax-challenges-arising-from-digitalisation-of-the-economy-global -anti-base-erosion-model-rules-pillar-two_782bac33-en. Under these rules, if the effective tax rate (ETR) for a jurisdiction is below 15%, top-up tax may be imposed. The amount of top-up tax is determined by multiplying the top-up tax percentage (the positive excess of 15% over the ETR in the jurisdiction) by the excess profits (the positive amount of the net GloBE income in such jurisdiction that exceeds a substance-based income exclusion). The top-up tax is collected under the QDMTT, IIR, and/or UTPR. If the partnership paid or accrued any QDMTT, IIR, and/or UTPR (or similar taxes) during the tax year, attach a statement that separately lists the dollar amount of each type of tax paid or accrued. See Table 4 below.

Table 4. Top-Up Tax

Type of Other International Item

Other International Item Amount

Other International Item Explanation

• For box 12, file Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation.

• For box 12, report information regarding any “Top-up Tax” paid or accrued during the tax year by the partnership. See Global Anti-Base Erosion (GloBE) Model Rules (Pillar Two) information for partners below. For more information about reporting any Top-up Tax paid or accrued by certain entities or branches owned by the partnership, see the instructions for Schedule G (Form 5471), Schedules K-2 and K-3 (Form 8865), and Schedule G (Form 8858).

• For box 12, report information regarding whether the partnership applied the temporary relief provided by Notice 2023-55, as modified by Notice 2023-80, to determine creditability of foreign taxes paid or otherwise required to be reported by the partnership. See Temporary relief below.

Don’t report for box 12:

• Form 8804, Annual Return for Partnership Withholding Tax; and

• Form 8805, Foreign Partner’s Information Statement of Section 1446 Withholding Tax.

These forms are separately filed. If a partner in the partnership, whether direct or indirect, needs certain information

GloBE QDMTT tax Top-up Tax

GloBE IIR tax Top-up Tax

GloBE UTPR tax Top-up Tax

GloBE Total taxes Top-up Tax

Temporary relief. Final foreign tax credit regulations were published January 4, 2022. The new regulations made changes to the rules relating to the creditability of foreign taxes under sections 901 and 903. Notice 2023-55 was subsequently released on July 21, 2023, allowing taxpayers to apply prior rules in place of certain rules under the new regulations (temporary relief). The rules described in this Notice were modified in part by Notice 2023-80, released on December 11, 2023, to address their application to partnerships and their partners and to extend the relief period until further notice.

or otherwise required to be reported by a partnership, including foreign taxes paid by a CFC (collectively, the partnership’s foreign taxes), the partnership makes the decision to apply (or not apply) the temporary relief. A partnership that applies the temporary relief to a tax year must apply the temporary relief to all the partnership’s foreign taxes. In addition, a partnership’s choice to apply temporary relief for a tax year will generally cause a partner to be required to apply (or to be precluded from applying) the temporary relief for the relief year to all other foreign taxes for which the partner would be eligible to claim a credit as provided in section 901. For more information, see Treasury Decision 9959, 2022-03 I.R.B. 328, available at IRS.gov/irb/2022-03_IRB#TD-9959 ; Notice 2023-55, 2023-32 I.R.B. 427, available at IRS.gov/2023-32_IRB#NOT-2023-55 ; and Notice 2023-80, 2023-52 I.R.B. 1584, available at IRS.gov/irb/2023-52_IRB#NOT-2023-80 .

6 Inst. for Schedules K-2 and K-3 (Form 8865) (2025)

Attach a statement stating whether the partnership has applied temporary relief to the partnership’s foreign taxes. See Table 5 below.

Table 5. Temporary Relief

Schedules K-2 and K-3, Parts II and III

Note: This information is relevant to partners computing a foreign tax credit on Form 1116 or 1118. Schedules K-2 and K-3, Parts II and III, must be completed unless the partnership doesn’t have a direct or indirect partner eligible to claim a foreign tax credit or the direct or indirect partner wouldn’t have to file a Form 1116 or 1118 to claim a credit. See section 904(j) and the further discussion in the next paragraphs. This requirement applies regardless of whether the partnership pays or accrues foreign taxes because other information, such as the source of the partnership’s income and the value of its assets, is relevant in determining the partner’s foreign tax credit. A partner that is eligible to claim a foreign tax credit includes a domestic corporation, a U.S. citizen or resident, U.S. citizen or resident beneficiaries of domestic trusts and estates, certain foreign corporations, and certain nonresident individuals. See sections 901 and 906. An indirect partner includes a partner that owns the partnership through a pass-through entity (for example, a partnership, an S corporation, or a trust (see Regulations section 1.904-5(a)(4)(iv) for the definition of pass-through entity)). An indirect partner also includes a partner that owns the partnership through a foreign corporation. See sections 960 and 1293(f). If there is insufficient information, a direct or indirect partner must presume such partner is eligible to claim a foreign tax credit and such partner would have to file a Form 1116 or 1118 to claim a credit. Accordingly, the Schedules K-2 and K-3 must be completed.

On Schedule K-2, Parts II and III, report the partnership’s gross income, gross receipts, cost of goods sold, certain deductions, and taxes by source and separate category. Also report information that the partner uses to allocate and apportion expenses and determine the source of certain items of gross income and gross receipts. Unless specifically noted below, report on Schedule K-3, Parts II and III, the partner’s share of the partnership’s gross receipts, gross income, cost of goods sold, certain deductions, and taxes by source and separate category. The partner adds its share of the partnership’s foreign source gross receipts, gross income, cost of goods sold, certain deductions, and taxes by separate category to its other foreign source gross receipts, gross income, cost of goods sold, certain deductions, and taxes in that separate category to figure its foreign tax credit. Also report on the Schedule K-3 the distributive share of expenses and the allocation and apportionment factors the partner uses to determine expenses allocated and apportioned to foreign source income.

Partnership determination. The source and separate category of certain gross income, gross receipts, and cost of goods sold, as well as the allocation and apportionment of certain deductions, can be determined for the partnership. This includes deductions that are definitely related to certain gross income of the partnership. See Regulations section 1.861-8(b) (1). See Schedule K-2, Part II, columns (a) through (e); Part III, Section 1, columns (a) through (e); Part III, Section 3, columns (a) through (d); and Part III, Section 5, columns (a) through (f). In Part III, Section 2, columns (a) through (e), some partnership assets may be characterized by source and separate category according to the partnership. This includes certain assets that

attract directly allocated interest expense under Temporary Regulations sections 1.861-10T(b) and (c). See Temporary Regulations section 1.861-10T(d)(2).

In Part III, Section 4, in the U.S. and Foreign columns, assign foreign income taxes paid or accrued to a separate category and source.

The partner’s distributive share of the amounts reported on Schedule K-2 is reported in equivalent columns in Schedule K-3, Parts II and III.

Certain gross receipts, gross income, cost of goods sold, assets, deductions, and taxes aren’t assigned to a source or separate category for the partnership. See Partner determination, later.

Foreign branch category income. Report all gross receipts, gross income, cost of goods sold, and deductions that are foreign branch category income. See Regulations section 1.904-4(f). Report all income that would be foreign branch category income of its partners as if all partners were U.S. persons that aren’t pass-through entities. See Schedule K-2, Part II, column (b); Part III, Sections 1 and 2, column (b); and Part III, Sections 4 and 5, column (c). The partner’s distributive share of the amounts reported in the Schedule K-2 is reported in equivalent columns on Schedule K-3, Parts II and III.

Schedule K-3. Any amounts reported on Schedule K-2 as foreign branch category income should be reported as general category income on the Schedule K-3, Parts II and III, provided to foreign individuals and foreign corporations.

Section 901(j) income. Income derived from each sanctioned country is subject to a separate foreign tax credit limitation. If the partnership derives such income, enter code "901j" on the line after “category code.” See Schedule K-2, Part II, Sections 1 and 2, column (e); Part III, Sections 1 and 2, column (e); Part III, Section 3, column (d); and Part III, Sections 4 and 5, column (f). The partner’s distributive share of the amounts reported on Schedule K-2 is reported in equivalent columns on Schedule K-3, Parts II and III. See the Instructions for Form 1118 for the potential countries to be listed with the section 901(j) category of income.

Note: As of the date of these instructions, section 901(j) is the only category reported in Part II, Sections 1 and 2, column (e); Part III, Sections 1 and 2, column (e); and Part III, Section 5, column (f).

Section 951A category income. Section 951A category income is any amount of global intangible low-taxed income (GILTI) includible in gross income under section 951A (other than passive category income). (Section 951A category income doesn’t include passive category income.) If the partnership pays or accrues tax on the receipt of a distribution of PTEP assigned to the reclassified section 951A PTEP group or section 951A PTEP group, these taxes must be assigned to section 951A category income. The U.S. person completing Form 8865 will enter code "951A" in Part III, Section 4, column (b). This code isn’t utilized in other portions of Parts II and III.

Income re-sourced by treaty. If a sourcing rule in an applicable income tax treaty characterizes any U.S. source income as foreign source, and there is an election to apply the treaty, the income will be treated as foreign source. This category applies if the partnership pays or accrues foreign income taxes on receipt of a distribution of PTEP that is sourced from an annual PTEP account that corresponds to the separate category relating to U.S. source income included under section 951(a)(1) and re-sourced as foreign source income under a treaty.

Inst. for Schedules K-2 and K-3 (Form 8865) (2025) 7

The designations below are only relevant for Part III, Section 4, column (f).

Code “RBT PAS.” If an applicable income tax treaty characterizes any U.S. source passive category income as foreign source passive category income, and there is an election to apply the treaty, enter code “RBT PAS.”

Code “RBT GEN.” If an applicable income tax treaty characterizes any U.S. source general category income as foreign source general category income, and there is an election to apply the treaty, enter code “RBT GEN.”

Code “RBT 951A.” If an applicable income tax treaty characterizes any U.S. source section 951A category income as foreign source section 951A category income, and there is an election to apply the treaty, enter code “RBT 951A.”

Partner determination. In Schedule K-2, Part II, column (f); Part III, Section 1, column (f); Part III, Section 3, lines 1 and 2, column (e); and Part III, Section 5, column (g), enter the gross income, income adjustments, and gross receipts of the partnership that are required to be sourced by the partner. This generally includes income from the sale of most personal property other than inventory, depreciable property, and certain intangible property sourced under section 865. This also includes certain foreign currency gain on section 988 transactions. See the instructions for Forms 1116 and 1118 and Pub. 514, Foreign Tax Credit for Individuals, for additional details. In Schedule K-2, Part II, column (f); and Part III, Section 3, lines 3 and 4, column (e), include deductions that are allocated and apportioned by the partner. This includes most interest expense and R&E expense. See Regulations sections 1.861-9(e) and 1.861-17(f). In Schedule K-2, Part III, Section 2, column (f), enter the assets that are assigned to a source and separate category by the partner. In Schedule K-2, Part III, Section 4, in the Partner column, enter the foreign income taxes that are assigned to a source of income by the partner. This includes taxes imposed on certain sales income. The partner’s distributive share of the amounts reported on Schedule K-2 is reported in equivalent columns on Schedule K-3, Parts II and III.

Schedule K-2, Part II; and Schedule K-3, Part II (Foreign Tax Credit Limitation)