Section 4. Foreign Taxes

Note: Don’t complete this Section 4 if the partnership doesn’t pay or accrue foreign taxes that are creditable under section 901 or 903 (a foreign income tax).

In Part III, Section 4, assign foreign income taxes paid or accrued (including on U.S. source income) to a separate category and source. Include taxes paid or accrued to foreign countries or to U.S. territories.

Attachment. As previously mentioned in the instructions for Schedule K-2, Part I, box 4, and Schedule K-3, Part I, box 4 (for distributive share), for each of the amounts listed in lines 1 through 3, attach to the Schedules K-2 and K-3 a statement reporting the following information.

• The dates on which the taxes were paid or accrued.

• The exchange rates used.

• The amounts in both foreign currency and U.S. dollars. See section 986(a).

Column (a). Enter the code for the type of tax.

Codes for Types of Tax

Code Type of Tax

WHTD Withholding tax on dividends

WHTP Withholding tax on distributions of PTEP

WHTB Withholding tax on branch remittances

WHTR Withholding tax on rents, royalties, and license fees

WHTI Withholding tax on interest

ECI Taxes paid or accrued to foreign countries or U.S. territories on certain effectively connected income

OTHS Other foreign taxes paid or accrued on sales income

OTHR Other foreign taxes paid or accrued on services income

OTH Other foreign taxes paid or accrued

If there are multiple types of tax for the same country, generate multiple alpha rows for the same country, one row for each type of tax. For example, see below.

Codes for Multiple Types of Tax

Description (a) Type of tax

A AA WHTD

B BB OTH

Column (b). Taxes assigned to section 951A category. Taxes assigned to section 951A category income are taxes paid or accrued on distributions of PTEP assigned to the reclassified section 951A PTEP and section 951A PTEP groups. This might not be able to be completed due to lack of information regarding the treatment of the current year distributions.

Column (f). Other category.

Foreign taxes paid or accrued to sanctioned countries. No credit is allowed for foreign taxes paid or accrued to certain sanctioned countries.

Foreign taxes related to PTEP re-sourced by treaty. 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, such taxes are included in column (f).

On the line after "category code," enter one of the following codes.

Code “RBT PAS.” If an applicable income tax treaty treats any U.S. source passive category income as foreign source passive category income, and the partner elected to apply the treaty, enter code “RBT PAS.”

Code “RBT GEN.” If an applicable income tax treaty treats any U.S. source general category income as foreign source general

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

category income, and the partner elected to apply the treaty, enter code “RBT GEN.”

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

Line 1. Enter in U.S. dollars the total foreign income taxes (described in section 901 or 903) that were paid or accrued by the partnership (according to its method of accounting for such taxes). Don’t reduce the amount that you report on line 1 by the reductions reported on line 2. Don’t report redetermined taxes on line 1. Report such taxes on line 3. If a partnership applies temporary relief provided by Notice 2023-55, then include on line 1 foreign taxes that are foreign income taxes under temporary relief. See the instructions for Part I, box 12, for additional information.

Note: Don’t include on line 1 any foreign income taxes not creditable but deductible as reported on Part II, Section 2, line 45.

If the partnership uses the cash method of accounting, check the "Paid" box and enter foreign income taxes paid during the tax year on line 1. Report each partner’s share on Schedule K-3, Part III, Section 3, line 1.

If the partnership uses the accrual method of accounting, check the "Accrued" box and enter foreign income taxes accrued on line 1. Report each partner’s share on Schedule K-3, Part III, Section 4, line 1.

Note: Check only one box, “Paid” or “Accrued,” depending on the method of accounting the partnership uses to take into account foreign income taxes.

Enter on a separate line (that is, after A, B, and C), taxes paid or accrued to each country. Enter the two-letter code from the list at IRS.gov/CountryCodes . Don’t enter “various” or “OC” for country code.

Exceptions. The instructions for Forms 1116 and 1118 specify exceptions from the requirement to report gross income and gross receipts by foreign country or U.S. territory regarding RICs and section 863(b). These exceptions apply as well to reporting of taxes in this section.

Example 4. Part III, Section 4: multiple country sources: foreign taxes. The facts are the same as in Example 2, earlier. FP uses the cash method of accounting and pays income taxes of $1,000 and $3,000 to Countries XX and YY, respectively. The U.S. person completes Part III, Section 4, line 1, as follows.

Example 4 Table

F. Foreign income taxes on foreign corporate distributions. For example, report taxes on dividends eligible for a deduction under section 245A and ineligible for credit under section 245A(d). Also, include taxes on a distribution of PTEP assigned to the following PTEP groups: reclassified section 965(a) PTEP, reclassified section 965(b) PTEP, section 965(a), and section 965(b) PTEP, a portion of which isn’t creditable. It may not be possible to determine the amount of a distribution that is attributable to non-previously taxed E&P or PTEP for which a foreign tax credit may be partially or entirely disallowed. However, it’s important to track this amount as a tax on a distribution. G. Other. Attach a statement to the Schedules K-2 and K-3 indicating the reason for the reduction. Don’t report amounts on line 2 by country.

Line 3. Enter in U.S. dollars the change in foreign tax as a result of a foreign tax redetermination. See section 905(c) and Regulations sections 1.905-3 through -5. If the amount is less than the original foreign tax, report the change as a negative amount. If the amount is more than the original foreign tax, report the change as a positive amount.

Note: Payment of additional foreign income taxes that relate to an earlier tax year by a partnership that uses the cash method of accounting doesn’t result in a foreign tax redetermination. See Regulations section 1.905-3(a). Such amounts should be reported on line 1 as foreign income taxes paid by the partnership in the current year. Report the U.S. tax year to which the foreign income tax relates. This would be the U.S. tax year that includes the close of the foreign tax year to which the tax relates. Report the date on which the tax was paid. If there is more than one date tax is paid, enter one of the dates paid on the schedule itself and then attach to the Schedules K-2 and K-3 a statement including all of the information reported on the schedule with the other dates paid.

If there is more than one redetermination in a year for different countries, report such redeterminations on separate lines. Enter the two-letter code from the list at IRS.gov/CountryCodes . Similarly, if there is more than one redetermination in a year for the same country, but the redeterminations are related to different years, report such redeterminations on separate lines.

Exceptions. The instructions for Forms 1116 and 1118 specify exceptions from the requirement to report gross income and gross receipts by foreign country or U.S. territory for RICs and section 863(b). These exceptions apply as well to reporting of taxes in this section. Don’t enter “various” or “OC” for the country code.

In addition, if the direct or indirect partners are corporations, attach a statement that includes the information on Schedule L (Form 1118), Parts I and II, as applicable, for each foreign tax redetermination. If the direct or indirect partners are individuals, estates, or trusts, attach a statement that includes the information on Schedule C (Form 1116), Parts I and II, as applicable, for each foreign tax redetermination. If the indirect partners are unknown, attach a statement that includes both the information on Schedule L (Form 1118), Parts I and II, as applicable; and Schedule C (Form 1116), Parts I and II, as applicable.

Contested taxes. In general, a contested foreign income tax liability doesn’t accrue until the contest is resolved and the amount of the liability has been finally determined. In addition, a contested foreign income tax liability isn’t a reasonable approximation of the final foreign income tax liability and so isn’t considered an amount of tax paid for purposes of section 901 until the contest is resolved. So, a partnership generally doesn’t take into account a contested liability as a creditable foreign tax expenditure until the contest is resolved and the liability has been paid. See Regulations section 1.905-1(f)(1). However, to

Line 2. Enter on line 2 a negative number for the sum of the taxes in the following categories.

A. Taxes on foreign mineral income (section 901(e)). B. Reserved. C. Taxes attributable to boycott operations (section 908). D. Reduction in taxes for failure to timely file (or furnish all of the information required on) Form 8865 (section 6038(c)). E. Foreign income taxes paid or accrued during the current tax year for splitter arrangements under section 909.

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the extent that a partnership has remitted a contested foreign income tax liability to a foreign country, partners may elect to claim a provisional foreign tax credit for their distributive shares of such contested foreign income tax liability. See Regulations section 1.905-1(f)(2).

For partnerships that are contesting a foreign income tax liability with a foreign country, but have remitted all or a portion of such contested liability, report information about the contested tax on line 3, and check the “Contested tax” box. In addition, attach a statement and include information necessary for partners to complete Form 7204 and Schedule L (Form 1118) (for direct or indirect corporate partners), or Schedule C (Form 1116) (for direct or indirect individual, trust, or estate partners), including a description of the contest and a description of the contested foreign income tax. If it’s unknown whether the partners are corporations, individuals, estates, or trusts, provide the information necessary for the partners to complete both Schedule L (Form 1118), Parts I and II (as applicable); and Schedule C (Form 1116), Parts I and II (as applicable).

Partnerships must also file a statement each year for which there are one or more contested liabilities outstanding or in which a contested tax is resolved that includes information necessary for partners to complete both Schedule L (Form 1118), Part V; and Schedule C (Form 1116), Part V.