SECTION 5. REQUIRED

INFORMATION STATEMENT

.01 Annual Information Statements. Pursuant to § 108(i)(7)(B), a taxpayer that makes an election under § 108(i) (except for a protective election under section 4.11(1) of this revenue procedure) must attach a statement meeting the requirements of section 5.02 of this revenue procedure to its federal income tax return for each taxable year beginning with the taxable year following the taxable year for which the taxpayer makes the election and ending with the first taxable year in which all items deferred under § 108(i) have been recognized.

September 8, 2009 315 2009–36 I.R.B.

in income in the current taxable year under § 108(i)(1);

(iii) COD income deferred under § 108(i) that the shareholder must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii);

(iv) COD income deferred under § 108(i) that has not been included in income in the current or prior taxable years;

(v) OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year;

(vi) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii);

(vii) OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii); and

(viii) OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years.

.05 Additional Annual Reporting Re- quirements for Certain Foreign Partner- ships .

(1) The rules of this section 5.05 apply to nonfiling foreign partnerships.

(2) A nonfiling foreign partnership that makes an election under § 108(i) (except for a protective election under section 4.11(1) of this revenue procedure) must file federal income tax returns with the Service containing the information under § 1.6031(a)–1(b)(5) for each taxable year in which a statement is required by section 5.01 of this revenue procedure. (3) The nonfiling foreign partnership must attach to its federal income tax returns the statements required under section 5.01 of this revenue procedure, but only for that portion of the COD income allocated to affected partners.

(4) For each taxable year in which a statement is required under section 5.01 of this revenue procedure, the nonfiling foreign partnership must provide each affected partner a Schedule K–1 (Form 1065) reporting § 108(i) information in the manner described in section 4.07(1) of this revenue procedure. Except for this § 108(i) information, the partnership need not complete Part III of the Schedule K–1 (Form 1065). The partnership must provide each affected partner with a copy of the Schedule K–1 (Form 1065) by the date provided in § 1.6031(b)–1T(b). The partnership must attach the Schedules K–1

the Schedule K–1 (Form 1065 or Form 1065–B) for each partner § 108(i) information in the manner described in section 4.07(1) of this revenue procedure. (2) Annual information statements provided to partners . The partnership must attach to the Schedule K–1 (Form 1065) provided to each partner for each taxable year in which a statement is required under section 5.01 of this revenue procedure, a statement meeting the requirements of this section 5.03(2). The partnership should not attach these statements to the Schedules K–1 that are filed with the Service, but must retain these statements, and each partner must retain that partner’s statement, in their respective books and records. A statement meets the requirements of this section 5.03(2) if the statement—

(a) Label . States “Section 108(i) Annual Information Statement for Partners” across the top of the statement.

(b) Required information . Clearly identifies for each applicable debt instrument to which a § 108(i) election applies—

(i) The partner’s deferred amount that has not been included in income as of the end of the prior taxable year;

(ii) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(1);

(iii) The partner’s deferred amount that the partner must include in income in the current taxable year under § 108(i)(5)(D)(i) or (ii);

(iv) The partner’s deferred amount that has not been included in income in the current or prior taxable years;

(v) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) in the current taxable year;

(vi) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(2)(A)(ii);

(vii) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that is allowable as a deduction in the current taxable year under § 108(i)(5)(D)(i) or (ii);

(viii) The partner’s share of the partnership’s OID deduction deferred under § 108(i)(2)(A)(i) that has not been deducted in the current or prior taxable years; and

(ix) The partner’s deferred § 752 amount that is treated as a distribution of money to the partner under § 752 in the current taxable year and any remaining deferred § 752 amount. If a partner fails to provide the written statement required by section 4.07(3) of this revenue procedure, the partnership must indicate that the amounts described in this section 5.03(2)(b)(ix) cannot be calculated because the partner did not provide the information necessary to report these amounts.

.04 Additional Annual Reporting Re- quirements for an S Corporation .

(1) In general . An S corporation that makes an election under § 108(i) (except for a protective election under section 4.11(1) of this revenue procedure) must attach to its federal income tax returns the statements required under section 5.01 of this revenue procedure. In addition, for each taxable year in which a statement is required under section 5.01 of this revenue procedure, the S corporation must report on the Schedule K–1 (Form 1120S) for each shareholder § 108(i) information in the manner described in section 4.08(1) of this revenue procedure.

(2) Annual information statements pro- vided to shareholders . The S corporation must attach to the Schedule K–1 (Form 1120S) provided to each shareholder for each taxable year in which a statement is required under section 5.01 of this revenue procedure a statement meeting the requirements of this section 5.04(2). The S corporation should not attach these statements to the Schedules K–1 that are filed with the Service, but must retain these statements, and each shareholder must retain that shareholder’s statement, in their respective books and records. A statement meets the requirements of this section 5.04(2) if the statement—

(a) Label . States “Section 108(i) Annual Information Statement for Shareholders” across the top;

(b) Required information . Clearly identifies for each applicable debt instrument to which an election under § 108(i) applies, the shareholder’s share of the S corporation’s—

(i) COD income deferred under § 108(i) that has not been included in income as of the end of the prior taxable year;

(ii) COD income deferred under § 108(i) that the shareholder must include

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egory 2 filers also must complete a statement containing their share of the items listed on each statement received by the partnership.

(c) The Category 1 and Category 2 filers should not attach the statements described in sections 5.07(3)(a)(ii) and 5.07(3)(b) of this revenue procedure, respectively, to the Schedules K–1 that are filed with the Service. However, Category 1 filers must retain the statements they complete and each partner must retain its own statement, in their respective books and records.

(4) If as a result of § 108(i)(5)(D)(ii), a partner of a partnership described in section 5.07(1) of this revenue procedure or a shareholder of an S corporation described in section 5.07(1) of this revenue procedure must recognize items deferred under § 108(i), the partnership or S corporation must report these items on the Schedule K–1 (Form 1065, Form 1065–B, or Form 1120S) and statements provided to the partner or shareholder pursuant to section 5.07(1) and (2) of this revenue procedure. Similar rules apply to Category 1 and Category 2 filers (Form 8865) described in section 4.12(6) of this revenue procedure.