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) - 2014 Page 12

of foreign trading gross receipts (Code

The name and EIN of the selling

Code Q. Commercial Revitalization

O1) and the extraterritorial income

partnership.

Deduction

exclusion (Code O2), the partnership was

The dates the QSB stock was

Follow the Instructions for Form 8582 for

not entitled to claim the exclusion because

purchased and sold.

commercial revitalization deductions from

it did not meet the foreign economic

The amount of gain that is not

rental real estate activities to figure how

process requirements. You may still

recognized under section 1045.

much of the deduction can be reported on

qualify for your share of this exclusion if

If a partner purchases QSB stock, the

Schedule E (Form 1040), line 28, column

the partnership's foreign trading gross

name of the corporation that issued the

(f).

receipts for the tax year were $5 million or

replacement QSB stock, the date the

less.

stock was purchased, and the cost of the

Note. The commercial revitalization

stock.

To qualify for this exclusion, your

deduction is not available for any building

If a partner treats the partner's interest

foreign trading gross receipts from all

placed in service after December 31,

in QSB stock that is purchased by a

sources for the tax year also must have

2009.

purchasing partnership as the partner's

been $5 million or less.

replacement QSB stock, the name and

Limited partners who qualify for the

Codes R1 and R2. Interest

EIN of the purchasing partnership, the

exclusion. Report the extraterritorial

Deduction Limitation for Corporate

name of the corporation that issued the

exclusion amount (Code O2) as a

replacement QSB stock, the partner's

Partners

deduction reducing the amount reported in

share of the cost of the QSB stock that

box 1 (see the box 1 instructions, earlier).

A corporate partner is required to treat its

was purchased by the partnership, the

share of interest income, interest expense,

computation of the partner's adjustment to

General partners who qualify for the

and partnership liabilities as income,

basis with respect to that QSB stock, and

exclusion. Report the Code O2 amount

expense, and liabilities of the corporation

the date the stock was purchased by the

in accordance with the instructions for

for purposes of the interest deduction

partnership.

box 9, Code A1, B1, or C1, whichever

limitation under section 163(j). The

applies. See Form 8873, Extraterritorial

Distribution of replacement QSB stock

corporation's share of interest income is

Income Exclusion, for more information.

to a partner that reduces another part-

reported in box 9 using code R1. Its share

ner's interest in replacement QSB

Partnership claimed the exclusion. If

of interest expense is reported using code

stock. You must recognize gain upon a

the partnership reports your share of

R2. The amounts reported using code R1

distribution of replacement QSB stock to

foreign trading gross receipts (Code O1)

and R2 are for information only, and are

another partner that reduces your share of

but not the amount of the extraterritorial

included in amounts reported elsewhere

the replacement QSB stock held by a

income exclusion, the partnership met the

on Schedule K-1. The corporation's share

partnership. The amount of gain that you

foreign economic process requirements

of partnership liabilities is shown in the first

must recognize is based on the amount of

and claimed the exclusion when figuring

column of Schedule K-1.

gain that you would recognize upon the

your share of partnership income. You

sale of the distributed replacement QSB

also may need to know the amount of your

Code S1. Domestic Production

stock for its fair market value on the date

share of foreign trading gross receipts

Activities Information

of the distribution, but not to exceed the

from this partnership to determine if you

amount you previously deferred under

met the $5 million or less exception

The partnership must attach a statement

section 1045 with respect to the

discussed above for purposes of

to Schedule K-1 that provides the

distributed replacement QSB stock. If the

qualifying for an extraterritorial income

information you need to figure the

partnership distributed your share of

exclusion from other sources.

domestic production activities deduction.

replacement QSB stock to another

Use Form 8903, Domestic Production

partner, the partnership should give you

Note. Upon request, the partnership

Activities Deduction, to figure this

(a) the name of the corporation that

should furnish you a copy of the

deduction. See the Instructions for Form

issued the replacement QSB stock, (b)

partnership's Form 8873 if there is a

8903 for details.

the date the replacement QSB stock was

reduction for international boycott

distributed to another partner or partners,

operations, illegal bribes, kickbacks, etc.

Code S2. Qualified Production

and (c) your share of the partnership's

Activities Income (QPAI)

adjusted basis and fair market value of the

Code P. Inversion Gain

replacement QSB stock on such date.

Report the QPAI reported to you by the

The partnership must provide a statement

For more information, see Regulations

partnership (in box 9 using Code S2) on

showing the amounts of each type of

section 1.1045-1.

Form 8903, in the applicable column of

income or gain that is included in inversion

line 7.

gain. The partnership has included

Code N. Unrecaptured Section

inversion gain in income elsewhere on

Code S3. Employer's W-2 Wages

1250 Gain

Schedule K-1. Inversion gain is also

reported under Code P because your

Report the portion of W-2 wages reported

Report this gain on line 11 of the

taxable income and alternative minimum

to you by the partnership (in box 9 using

Unrecaptured Section 1250 Gain

taxable income cannot be less than the

Code S3) on Form 8903, line 17.

Worksheet in the Instructions for

inversion gain. Also, your inversion gain

Schedule D (Form 1040). Do not report

(a) is not taken into account in figuring the

Code T. Section 409A Income

the gain on line 5 as stated on the

amount of net operating loss (NOL) for the

worksheet.

This is compensation to partners deferred

tax year or the amount of NOL that can be

carried over to each tax year, (b) may limit

under a section 409A nonqualified

Codes O1 and O2. Extraterritorial

the amount of your credits, and (c) is

deferred compensation plan that does not

Income Exclusion

meet the requirements of section 409A.

treated as income from sources within the

This amount is also reported in box 9

United States for the foreign tax credit.

Partnership did not claim the exclu-

using Code F. This amount is subject to

See section 7874 for details.

sion. If the partnership reports your share

interest and additional tax to be reported

Instructions for Schedule K-1 (1065-B)

-12-

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