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Credit for small employer health insurance

and deductions (code E) allocable to, oil,

Code Q. Other foreign transactions. On

premiums (Form 8941).

gas, and geothermal properties included in

a statement attached to Schedule K-1, the

Employee retention credit (Form 5884-A).

box 1 of Schedule K-1. The partnership

partnership will report any other information

should have attached a statement that

on foreign transactions that you may need

shows any income from or deductions

using code Q.

Box 16. Foreign

allocable to such properties that are included

The partnership will attach a statement

Transactions

in boxes 2 through 13, 18, and 20 of

that separately identifies any arrangement,

Schedule K-1. Use the amounts reported

along with the taxes paid or accrued in

and the amounts on the attached statement

Codes A through N. Use the information

connection with the arrangement, in which

identified by codes A through N, code Q, and

to help you figure the net amount to enter on

the partnership participates that would

line 26 of Form 6251.

any attached statements to figure your

qualify as a splitter arrangement under

foreign tax credit.

Code F. Other AMT items. Enter the

section 909 if one or more partners are

information on the statement attached by the

Taxpayers filing Form 1116—If you

covered persons regarding an entity that

partnership on the applicable lines of Form

have any qualified dividends, capital

took into account related income from the

6251, Form 4626, or Schedule I (Form

gains (including any capital gain

arrangement. The statement will also

CAUTION

1041).

distributions), capital losses, collectibles

indicate whether the partnership has taken

gain, collectibles losses, unrecaptured

into account any related income from any

section 1250 gain, net section 1231 gain, or

such splitter arrangement. See section 909

Box 18. Tax-Exempt

net section 1231 losses, you may have to

and the related regulations for rules

Income and Nondeductible

make certain adjustments to those amounts

regarding splitter arrangements.

before taking them into account on Form

Expenses

When the gain deferral method, as

1116.

described in Treasury Regulations section

1.721(c)-3T is being applied, a partnership

Code A. Tax-exempt interest income.

For details, see Form 1116, Foreign Tax

that is a section 721(c) partnership will attach

Report on your return, as an item of

Credit, and its instructions; Form 1118,

to the Schedule K-1 provided to a U.S.

information, your share of the tax-exempt

Foreign Tax Credit—Corporations, and its

transferor the information required under

interest received or accrued by the

instructions; and Pub. 514, Foreign Tax

Temporary Regulations section

partnership during the year. Individual

Credit for Individuals.

1.721(c)-6T(b)(2) and (3). A partnership that

partners include this amount on Form 1040,

Codes O and P. Extraterritorial income

is a section 721(c) partnership will also

line 8b. Increase the adjusted basis of your

exclusion.

attach to its Form 1065 a Schedule K-1 for

interest in the partnership by this amount.

each partner that is a related foreign person

1. Partnership did not claim the

Code B. Other tax-exempt income.

exclusion. If the partnership reports your

with respect to the U.S. transferor. For an

Increase the adjusted basis of your interest

share of foreign trading gross receipts (code

indirect partner that is a related foreign

in the partnership by the amount shown, but

O) and the extraterritorial income exclusion

person with respect to the U.S. transferor,

do not include it in income on your tax return.

(code P), the partnership wasn't entitled to

the Schedule K-1 will only include relevant

claim the exclusion because it didn't meet

information with respect to section 721(c)

The partnership will attach a

the foreign economic process requirements.

property. See Temporary Regulations

statement for the amount included

TIP

You may still qualify for your share of this

section 1.721(c)-1T for definitions.

under code B that is exempt by

exclusion if the partnership's foreign trading

reason of section 892 and describe the

gross receipts for the tax year were $5

nature of the income.

Box 17. Alternative

million or less. To qualify for this exclusion,

Minimum Tax (AMT) Items

your foreign trading gross receipts from all

Code C. Nondeductible expenses. The

sources for the tax year also must have been

nondeductible expenses paid or incurred by

Use the information reported in box 17 (as

$5 million or less. If you qualify for the

the partnership are not deductible on your

well as your adjustments and tax preference

exclusion, report the exclusion amount in

tax return. Decrease the adjusted basis of

items from other sources) to prepare your

accordance with the instructions for Income

your interest in the partnership by this

Form 6251, Alternative Minimum

(Loss), earlier, for box 1, 2, or 3, whichever

amount.

Tax—Individuals; Form 4626, Alternative

applies. See Form 8873, Extraterritorial

Minimum Tax—Corporations; or Schedule I

Income Exclusion, for details.

Box 19. Distributions

(Form 1041), Alternative Minimum

2. Partnership claimed the exclusion. If

Tax—Estates and Trusts.

the partnership reports your share of foreign

Code A. Cash and marketable securities.

A partner that is a corporation

trading gross receipts but not the amount of

Code A shows the distributions the

subject to AMT must notify the

the extraterritorial income exclusion, the

TIP

partnership made to you of cash and certain

partnership of its status.

partnership met the foreign economic

marketable securities. The marketable

process requirements and claimed the

securities are included at their fair market

Code A. This amount is your share of the

exclusion when figuring your share of

value (FMV) on the date of distribution

partnership's post-1986 depreciation

partnership income. You also may need to

(minus your share of the partnership's gain

adjustment. If you are an individual partner,

know the amount of your share of foreign

on the securities distributed to you). If the

report this amount on line 18 of Form 6251.

trading gross receipts from this partnership

amount shown as code A exceeds the

to determine if you met the $5 million or less

Code B. This amount is your share of the

adjusted basis of your partnership interest

exception discussed above for purposes of

partnership's adjusted gain or loss. If you are

immediately before the distribution, the

qualifying for an extraterritorial income

an individual partner, report this amount on

excess is treated as gain from the sale or

exclusion from other sources.

line 17 of Form 6251.

exchange of your partnership interest.

Generally, this gain is treated as gain from

Upon request, the partnership

Code C. This amount is your share of the

the sale of a capital asset and should be

should furnish you a copy of the

partnership's depletion adjustment. If you are

TIP

reported on Form 8949 and the Schedule D

partnership's Form 8873 if there is a

an individual partner, report this amount on

for your return. However, if you receive cash

reduction for international boycott

line 9 of Form 6251.

or property in exchange for any part of a

operations, illegal bribes, kickbacks, and

Codes D and E. Oil, gas, & geothermal

partnership interest, the amount of the

other payments.

properties—gross income and deduc-

distribution attributable to your share of the

tions. The amounts reported on these lines

partnership's unrealized receivable or

include only the gross income (code D) from,

inventory items results in ordinary income

Partner's Instructions for Schedule K-1 (Form 1065)

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Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Deductions, Credits, Etc. - 2017 Page 13

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