SEC. 18. SPECIFICATIONS FOR

FILING SUBSTITUTE SCHEDULES K–1

Prior approval is NOT required for a substitute Schedule K–1 that accompanies Form 1065 (for partnership), a Form 1120S (for small business corporation), or a Form 1041 (for fiduciary) when the substitute Schedule K–1 meets all of the following requirements.

.01 The Schedule K–1 must contain the payer and recipient’s name, address and SSN/EIN.

.02 The Schedule K–1 must contain all line items required for use by the taxpayer.

.03 The line items must be in the same order and arrangement as those on the official form.

.04 The line items must be numbered, titled, and/or captioned exactly as shown on the official form.

.05 Each taxpayer’s information must be on a separate sheet of paper. Therefore, all continuously printed substitutes must be separated, by taxpayer, before filing with the Service.

.06 Schedules K–1 for recipients must have instructions for required line items attached.

.07 You may be subject to penalties if you file Schedules K–1 with the Service and furnish Schedules K–1 to partners, shareholders, or beneficiaries that do not conform to the specifications of this revenue procedure.

.08 The amount of each partner’s, shareholder’s or beneficiary’s share of each line item must be shown. The furnishing of a total amount for each line item and a percentage (or decimal equivalent) to be applied to such total

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amount by the partner, shareholder, or beneficiary does not satisfy the law and the specifications of this revenue procedure.

.09 If you file Schedules K–1 not conforming to the above specifications, IRS may consider these as not processable and return them to you to be filed correctly. You may also be subjected to the penalty as mentioned in .07 above.