Partner'S Instructions For Schedule K-1 (Form 1065-B) - Partner'S Share Of Income (Loss) From An Electing Large Partnership (For Partner'S Use Only) - 2007
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Department of the Treasury
Internal Revenue Service
Partner’s Instructions for
Schedule K-1 (Form
1065-B)
Partner’s Share of Income (Loss) From an Electing Large Partnership
(For Partner’s Use Only)
Section references are to the Internal
partnership’s treatment, you may be
Electing Large
subject to the accuracy-related penalty.
Revenue Code unless otherwise noted.
Partnerships (ELPs)
This penalty is in addition to any tax that
results from making your amount or
This partnership has elected simplified
What’s New
treatment of the item consistent with that
reporting requirements intended to make
shown on the partnership’s return. Any
it simpler for you to report your share of
deficiency that results from making the
1. Investors are no longer required to
partnership income, credits, deductions,
amounts consistent may be assessed
file Form 8271, Investor Reporting Tax
etc. Generally, income, capital gains,
immediately.
Shelter Registration Number, if due after
credits, and deductions are combined at
August 2, 2007. The box on the Schedule
the partnership level so that the number
Sale or Exchange of
K-1 used to report the tax shelter
of partnership items separately reported
registration number has been deleted.
to partners is reduced. Most limitations
Partnership Interest
Information you need to complete a
and elections affecting partnership
Generally, a partner who sells or
disclosure statement related to a
income are made by the electing large
exchanges a partnership interest in a
reportable transaction in which the
partnership.
section 751(a) exchange must notify the
partnership participates will be reported in
For limited partners, income and other
partnership, in writing, within 30 days of
box 9 under code U. See the instructions
items from the partnership’s trade or
the exchange (or, if earlier, by January 15
for code U, on page 11, for more
business and rental activities are treated
of the calendar year following the
information.
as being from a trade or business that is a
calendar year in which the exchange
2. The categories of foreign gross
single passive activity. These items are
occurred). A “section 751(a) exchange” is
income sourced at the partnership level
reported in boxes 1, 4a, and 5, with most
any sale or exchange of a partnership
have been renamed and reordered.
credits being reported in boxes 7 and 8.
interest in which any money or other
These changes are reflected in the box 9
property received by the partner in
General partners must make their own
code descriptions for codes K4(a) through
exchange for that partner’s interest is
determinations as to whether the activities
K4(c) and K7(a) through K7(c), and
attributable to unrealized receivables (as
are passive for them. Therefore,
correspond to changes made to Form
defined in section 751(c)) or inventory
partnership items from trade or business,
1116, Foreign Tax Credit.
items (as defined in section 751(d)).
rental real estate, and other rental
activities are separately reported for each
The written notice to the partnership
General Instructions
activity in box 9.
must include the names and addresses of
both parties to the exchange, the
Income, etc., from other activities
identifying numbers of the transferor and
(investment and portfolio income and
Purpose of Schedule K-1
(if known) of the transferee, and the
deductions) are reported in boxes 2, 3,
exchange date.
The partnership uses Schedule K-1 to
4b, and 6 for both limited and general
report your share of the partnership’s
partners.
An exception to this rule is made for
income, deductions, credits, etc. Keep it
sales or exchanges of publicly traded
Errors
for your records. Do not file it with your
partnership interests for which a broker is
tax return. The partnership has filed a
required to file Form 1099-B, Proceeds
You must report partnership items shown
copy with the IRS.
From Broker and Barter Exchange
on your Schedule K-1 (and any attached
Transactions.
schedules) the same way that the
You are liable for tax on your share of
partnership treated the items on its return.
If a partner is required to notify the
the partnership income, whether or not
If you believe the partnership has made
partnership of a section 751(a) exchange
distributed. Include your share on your tax
an error on your Schedule K-1, notify the
but fails to do so, a $50 penalty may be
return if a return is required. Use these
partnership. Do not change any items on
imposed for each such failure. However,
instructions to help you report the items
your copy of Schedule K-1. Generally, an
no penalty will be imposed if the partner
shown on Schedule K-1 on your tax
adjustment to correct an error will take
can show that the failure was due to
return.
effect for the tax year in which the
reasonable cause and not willful neglect.
partnership actually makes the
The amount of loss and deduction that
Nominee Reporting
adjustment. However, if the error involves
you can claim on your tax return may be
a change to your distributive share of a
less than the amount reported on
Any person who holds, directly or
partnership item, the partnership should
Schedule K-1. It is the partner’s
indirectly, an interest in a partnership as a
file an amended partnership return and
responsibility to consider and apply any
nominee for another person must furnish
send you a corrected Schedule K-1.
applicable limitations. See Limitations on
a written statement to the partnership by
Losses, Deductions, and Credits
If the treatment on your original or
the last day of the month following the
beginning on page 2 for more information.
amended return is inconsistent with the
end of the partnership’s tax year. This
Cat. No. 26141W
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