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partners, it will provide a statement

reportable transactions in which the

partners is a foreign corporation. If the

identifying your share of:

partnership participates. If the partnership

partnership allocates effectively connected

The deferred section 108(i) cancellation of

participates in a transaction that must be

income to the partner, the statement will

debt (COD) income that has not been

disclosed on Form 8886, Reportable

contain the information needed to complete

included in income in the current or prior tax

Transaction Disclosure Statement, both you

lines 1 through 10, 13, 14, 15b, 17a, 17b,

years,

and the partnership may be required to file

and 18 of Schedule P (Form 1120-F). If the

The partnership's original issue discount

Form 8886 for the transaction. The

partnership doesn't allocate effectively

(OID) deduction deferred under section

determination of whether you are required to

connected income to the partner, the

108(i)(2)(A)(i) that has not been deducted in

disclose a transaction of the partnership is

statement will contain the information

the current or prior tax years,

based on the category(s) under which the

needed to complete lines 13, 14, and 18 of

The deferred section 752 amount that is

transaction qualifies for disclosure and is

Schedule P (Form 1120-F).

treated as a distribution of money under

determined by you and the partnership. You

9. Conservation reserve program

section 752 in the current tax year, and

may have to pay a penalty if you are required

payments. Individuals who received social

The deferred section 752 amount

to file Form 8886 and do not do so. See the

security retirement or disability benefits, and

remaining as of the end of the current tax

Instructions for Form 8886 for details.

are partners in farm partnerships that receive

year.

3. Interest and additional tax on

conservation reserve program payments, do

compensation deferred under a section

not pay self-employment tax on their portion

Code Y. Net investment income. The

409A nonqualified deferred compensation

of the payments. The partnership will report

partnership may use this code Y to report

plan that doesn't meet the requirements of

your portion of the conservation reserve

information you may need to determine your

section 409A. See section 409A(a)(1)(B) to

program payments in box 20 using code Z.

net investment income tax under section

figure the interest and additional tax on this

See Schedule SE (Form 1040) for

1411, including information regarding

income. Report this interest and tax on

information on excluding the payment from

income from controlled foreign corporations

line 62 of Form 1040. This income is

your calculation of self-employment tax.

(CFCs) and passive foreign investment

included in the amount in box 4, Guaranteed

companies (PFICs) the stock of which is

10. Acceleration of AMT credit

Payments.

owned by the partnership. Any information

(corporations only). If a corporate partner

that isn't provided elsewhere on

4. Inversion gain. The partnership will

has made an election to accelerate the AMT

Schedule K-1 (or an attachment to

provide a statement showing the amounts of

credit in lieu of bonus depreciation, it is

Schedule K-1) is provided using code Y. For

each type of income or gain that is included

required to notify the partnership in writing of

CFCs and PFICs that you treat as qualified

in inversion gain. The partnership has

this election. See Rev. Proc. 2009-16,

electing funds (QEFs), the information that is

included inversion gain in income elsewhere

2009-6 I.R.B. 449, and Rev. Proc. 2009-33,

relevant to you will depend on whether you,

on Schedule K-1. Inversion gain is also

2009-29 I.R.B. 150, for more information

the partnership, or a lower-tier entity has

reported under code Z because your taxable

about the written notification that the electing

made an election under Regulations section

income and alternative minimum taxable

corporate partner must provide the

1.1411-10(g) with respect to the CFC or

income cannot be less than the inversion

partnership. The partnership is required to

QEF. For example, if the partnership made

gain. Also, your inversion gain (a) isn't taken

refigure the electing corporate partner's

an election under Regulations section

into account in figuring the net operating loss

share of depreciation on any eligible

1.1411-10(g) for a CFC the stock of which is

(NOL) for the tax year or the NOL that can be

qualified property or extension property to

owned by the partnership, and the relevant

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

eliminate bonus depreciation and use the

income and deduction items derived from

your credits, and (c) is treated as income

straight line depreciation method for such

that CFC are reported elsewhere on the

from sources within the United States for the

property. The partnership will attach a

Schedule K-1, then you will not need the

foreign tax credit. See section 7874 for

statement to Schedule K-1 that lists each

information provided in code Y to complete

details.

partnership item that includes bonus

your Form 8960.

depreciation and shows the electing

5. Qualifying advanced coal project

corporate partner's adjustment for each item

If you are an individual who is a U.S.

property. Use the amounts the partnership

that results from the refigured depreciation

citizen or resident, or a domestic trust or

provides you to figure the amounts to report

and elimination of the bonus depreciation.

estate, follow the Instructions for Form 8960

on Form 3468, lines 5a through 5c.

The partner must adjust the amount shown

to figure and report your net investment

6. Qualifying gasification project

on Schedule K-1 for these partnership items

income and adjusted gross income or

property. Use the amounts the partnership

by the amount of the corresponding

modified adjusted gross income. Corporate

provides you to figure the amounts to report

adjustment. See section 168(k)(4) for more

partners are not subject to the net investment

on Form 3468, lines 6a and 6b.

information.

income tax. See Regulations sections

7. Qualifying advanced energy project

1.1411-1 through -10 for details.

11. Any information you may need to

property. Use the amount the partnership

comply with the limitation on excess farm

Code Z. Other information. The

provides you to figure the amount to report

losses of certain taxpayers under section

partnership will report the following:

on Form 3468, line 7.

461(j).

1. Any information a publicly traded

8. The information needed to complete

12. Any other information you may need

partnership needs to determine whether it

Schedule P (Form 1120-F), List of Foreign

to file your return not shown elsewhere on

meets the 90% qualifying income test of

Partner Interests in Partnerships. When

Schedule K-1.

section 7704(c)(2).

required, the partnership will make this report

The partnership should give you a

on an attached statement to partners that are

A partner is required to notify the

description and the amount of your share for

a corporation (identified as a foreign partner

partnership of its status as a publicly

TIP

each of these items.

under Regulations section 1.1446-1(c)(3)) or

traded partnership.

partners that are a partnership (domestic or

foreign) if the reporting partnership knows, or

2. Any information you need to

has reason to know, that one or more of the

complete a disclosure statement for

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

-16-

Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Deductions, Credits, Etc. - 2017 Page 16

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