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2017

Department of the Treasury

Internal Revenue Service

Partner's Instructions for

Schedule K-1 (Form 1065)

Partner's Share of Income, Deductions, Credits, etc.

(For Partner's Use Only)

If the treatment on your original or

interests for which a broker is required to file

Section references are to the Internal Revenue Code

unless otherwise noted.

amended return is inconsistent with the

Form 1099-B, Proceeds From Broker and

partnership's treatment, or if the partnership

Barter Exchange Transactions.

Future Developments

was required to but has not filed a return, you

If a partner is required to notify the

must file Form 8082, Notice of Inconsistent

For the latest information about

partnership of a section 751(a) exchange but

Treatment or Administrative Adjustment

developments related to Schedule K-1 (Form

fails to do so, the partner will be subject to a

Request (AAR), with your original or

1065) and the Partner's Instructions for

penalty for each such failure. However, no

amended return to identify and explain any

Schedule K-1 (Form 1065), such as

penalty will be imposed if the partner can

inconsistency (or to note that a partnership

legislation enacted after they were

show that the failure was due to reasonable

return has not been filed).

published, go to IRS.gov/Form1065.

cause and not willful neglect.

If you are required to file Form 8082 but

General Instructions

Gain or loss from the disposition of

do not do so, you may be subject to the

your partnership interest may be net

accuracy-related penalty. This penalty is in

TIP

investment income under section

addition to any tax that results from making

Purpose of Schedule K-1

1411 and could be subject to the net

your amount or treatment of the item

investment income tax. See Form 8960, Net

consistent with that shown on the

The partnership uses Schedule K-1 to report

Investment Income Tax—Individuals,

partnership's return. Any deficiency that

your share of the partnership's income,

Estates, and Trusts, and its instructions for

results from making the amounts consistent

deductions, credits, etc. Keep it for your

information about how to report and figure

may be assessed immediately.

records. Do not file it with your tax return

the tax due.

unless you are specifically required to do so.

Errors

(See the instructions for Code O. Backup

Nominee Reporting

withholding, later.) The partnership files a

If you believe the partnership has made an

copy of Schedule K-1 (Form 1065) with the

error on your Schedule K-1, notify the

Any person who holds, directly or indirectly,

IRS.

partnership and ask for a corrected

an interest in a partnership as a nominee for

Schedule K-1. Do not change any items on

For your protection, Schedule K-1 may

another person must furnish a written

your copy of Schedule K-1. Be sure that the

show only the last four digits of your

statement to the partnership by the last day

partnership sends a copy of the corrected

identifying number (social security number

of the month following the end of the

Schedule K-1 to the IRS. If you are a partner

(SSN), etc.). However, the partnership has

partnership's tax year. This statement must

in a partnership that doesn't meet the small

reported your complete identifying number to

include the name, address, and identifying

partnership exception and you report any

the IRS.

number of the nominee and such other

partnership item on your return in a manner

person, description of the partnership

Although the partnership generally isn't

different from the way the partnership

interest held as nominee for that person, and

subject to income tax, you may be liable for

reported it, you must file Form 8082.

other information required by Temporary

tax on your share of the partnership income,

Regulations section 1.6031(c)-1T. A

Sale or Exchange of

whether or not distributed. Include your

nominee that fails to furnish this statement

share on your tax return if a return is

Partnership Interest

must furnish to the person for whom the

required. Use these instructions to help you

nominee holds the partnership interest a

report the items shown on Schedule K-1 on

Generally, a partner who sells or exchanges

copy of Schedule K-1 and related

your tax return.

a partnership interest in a section 751(a)

information within 30 days of receiving it from

exchange must notify the partnership, in

the partnership.

The amount of loss and deduction you

writing, within 30 days of the exchange (or, if

may claim on your tax return may be less

earlier, by January 15 of the calendar year

A nominee who fails to furnish all the

than the amount reported on Schedule K-1. It

following the calendar year in which the

information required by Temporary

is the partner's responsibility to consider and

exchange occurred). A “section 751(a)

Regulations section 1.6031(c)-1T when due,

apply any applicable limitations. See

exchange” is any sale or exchange of a

or who furnishes incorrect information, is

Limitations on Losses, Deductions, and

partnership interest in which any money or

subject to a $260 penalty for each failure.

Credits, later, for more information.

other property received by the partner in

The maximum penalty is $3,218,500 for all

exchange for that partner's interest is

Inconsistent Treatment of

such failures during a calendar year. If the

attributable to unrealized receivables (as

nominee intentionally disregards the

Items

defined in section 751(c)) or inventory items

requirement to report correct information,

(as defined in section 751(d)).

each $260 penalty increases to $530 or, if

Generally, you must report partnership items

greater, 10% of the aggregate amount of

shown on your Schedule K-1 (and any

The written notice to the partnership must

items required to be reported, and there is no

attached statements) the same way that the

include the names and addresses of both

limit to the amount of the penalty.

partnership treated the items on its return.

parties to the exchange, the identifying

This rule doesn't apply if your partnership is

numbers of the transferor and (if known) of

International Boycotts

within the “small partnership exception” and

the transferee, and the exchange date.

doesn't elect to have the tax treatment of

Every partnership that had operations in, or

partnership items determined at the

An exception to this rule is made for sales

related to, a boycotting country, company, or

partnership level.

or exchanges of publicly traded partnership

Jan 23, 2018

Cat. No. 11396N

Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Deductions, Credits, Etc. - 2017

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