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) - 2003 Page 9

do not apply to the Schedule K-1 of Form

general limitation foreign source

the distribution, the excess is treated as

1065-B.

income.

gain from the sale or exchange of your

partnership interest. Generally, this gain

Code M1. Name of foreign country or

Code M8(a). Total foreign taxes paid.

is treated as gain from the sale of a

Include this amount in Part II of Form

U.S. possession. Include on Form 1116,

capital asset and should be reported on

1116.

Part I, item l. For each country reported,

the Schedule D for your return. However,

the partnership must give you the amount

Code M8(b). Total foreign taxes

the gain may be ordinary income. For

and a description of your share of the

accrued. Include this amount in Part II of

details, see Pub. 541.

following items for Codes M2 through M9.

Form 1116.

For each country or possession being

The partnership will separately identify

Code M9. Reduction in taxes available

reported, a separate column in Part I and

both of the following:

for credit. Enter this amount on line 12

•

a separate line in Part II is needed on

The fair market value of the marketable

of Form 1116.

Form 1116.

securities when distributed (minus your

Code N. Oil and Gas Activities

share of the gain on the securities

Code M2. Gross income from all

Generally, oil and gas income,

distributed to you).

sources. Enter this amount on line 3e of

•

deductions, credits, and other items are

The partnership’s adjusted basis of

Form 1116.

included in your distributive share of

those securities immediately before the

Code M3. Gross income sourced at

income or loss from passive loss

distribution.

partner level. Although all this income

limitation activities, general credits, and

reported has been apportioned to foreign

Decrease the adjusted basis of your

the alternative minimum tax adjustment.

source categories of income, you must

interest in the partnership (but not below

However, distributive shares of all oil and

nevertheless determine whether the

zero) by the amount of cash distributed to

gas income, deductions, credits, and

income being reported is U.S. source

you and the partnership’s adjusted basis

other items are separately reported to

income or foreign source income. See

of the distributed securities. Advances or

partners who are disqualified persons

page 5 of the Instructions for Form 1116

drawings of money or property against

(defined on page 2) in accordance with

for the rules to source the income

your distributive share are treated as

the regular partnership rules, here or on

reported to you. Enter only foreign source

current distributions made on the last day

an attached schedule.

income on lines 1 and 3d of Form(s)

of the partnership’s tax year.

A partner must notify the partnership of

1116. A separate Form 1116 or 1118 is

Your basis in the distributed

its status as a disqualified person.

required for each foreign source category

marketable securities (other than in

of income. Do not include income that you

Codes O1 Through O9.

liquidation of your interest) is the smaller

determined to be U.S. source income.

Miscellaneous

of:

•

Codes M4(a) Through M4(c). Foreign

The partnership’s adjusted basis in the

Code O1. Other tax-exempt income.

gross income sourced at partnership

securities immediately before the

Increase the adjusted basis of your

level. The following types of income have

distribution increased by any gain

interest in the partnership by the amount

already been sourced for you by the

recognized on the distribution of the

shown in box 9, Code O1, but do not

partnership. Include these amounts on

securities or

include it in income on your tax return.

•

lines 1 and 3d of the applicable Forms

The adjusted basis of your partnership

Code O2. Nondeductible expenses.

1116 (i.e., the Forms 1116 for each

interest reduced by any cash distributed

The nondeductible expenses paid or

category of income provided to you).

in the same transaction and increased by

•

incurred by the partnership are not

Code M4(a). Passive foreign source

any gain recognized on the distribution of

deductible on your tax return. Decrease

income.

the securities.

•

the adjusted basis of your interest in the

Code M4(b). Listed foreign

partnership by this amount.

If you received the securities in

categories of income.

•

liquidation of your partnership interest,

Code M4(c). General limitation

Code O3. Unrelated business taxable

your basis in the marketable securities is

foreign source income.

income. The partnership will give you

equal to the adjusted basis of your

any information you need to figure

Code M5. Interest expense allocated

partnership interest reduced by any cash

unrelated business taxable income under

and apportioned at the partner level.

distributed in the same transaction and

section 512(a)(1) (but excluding any

Include this amount on line 4b of the

increased by any gain recognized on the

modifications required by paragraphs (8)

applicable Forms 1116. Do not include

distribution of the securities.

through (15) of section 512(b)) for a

any interest expense allocated and

partner that is a tax-exempt organization.

apportioned to U.S. source income.

If, within 5 years of a distribution to you

Reminder: A partner is required to notify

of marketable securities, you contributed

Code M6. Other expenses allocated

the partnership of its tax-exempt status.

appreciated property (other than those

and apportioned at the partner level.

securities) to the partnership and the fair

Include this amount on line 2 of the

Code O4. Health insurance. Any

market value of those securities

applicable Forms 1116. Do not include

amounts paid during the tax year for

exceeded the adjusted basis of your

any expenses allocated and apportioned

insurance that constitutes medical care

partnership interest immediately before

to U.S. source income on any line of Part

for you, your spouse, and your

the distribution (reduced by any cash

I of Form 1116.

dependents. On line 29 of your 2003

received in the distribution), you may

Form 1040, you may be allowed to deduct

Codes M7(a) Through Codes M7(c).

have to recognize gain on the appreciated

up to 100% of such amounts, even if you

Deductions allocated and apportioned

property. For property contributed after

do not itemize deductions. If you do

at partnership level to foreign source

June 8, 1997, the 5-year period is

itemize deductions, enter on line 1 of

income. The following codes report the

generally extended to 7 years. See

Schedule A (Form 1040) any amounts not

expenses allocated and apportioned by

section 737 for details.

deducted on line 29 of Form 1040.

the partnership to foreign source

categories of income. Include these

Code O5. Distributions of money (cash

Code O6. Distributions of property

amounts on line 2 of the applicable Forms

and marketable securities). Box 9,

other than money. Box 9, Code O6,

1116 (i.e., the Forms 1116 for each

Code O5, shows the distributions the

shows the partnership’s adjusted basis of

category of income provided to you).

partnership made to you of cash and

property other than money immediately

•

Code M7(a). Deductions allocated

certain marketable securities. The

before the property was distributed to

and apportioned at partnership level to

marketable securities are included at their

you. In addition, the partnership will

passive foreign source income.

fair market value on the date of

attach a statement showing the cost basis

•

Code M7(b). Deductions allocated

distribution (minus your share of the

and fair market value of each property

and apportioned at partnership level to

partnership’s gain on the securities

distributed. Decrease the adjusted basis

listed foreign categories of income.

distributed to you). If the amount shown

of your interest in the partnership by the

•

Code M7(c). Deductions allocated

here exceeds the adjusted basis of your

amount of your basis in the distributed

and apportioned at partnership level to

partnership interest immediately before

property. Your basis in the distributed

-9-

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