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1. Partnership did not claim the

Note. A partner that is a corporation subject

partnership made to you of cash and certain

exclusion. If the partnership reports your

to alternative minimum tax must notify the

marketable securities. The marketable

share of foreign trading gross receipts (code

partnership of its status.

securities are included at their fair market

O) and the extraterritorial income exclusion

value (FMV) on the date of distribution

Code A. This amount is your share of the

(code P), the partnership was not entitled to

(minus your share of the partnership's gain

partnership's post-1986 depreciation

claim the exclusion because it did not meet

on the securities distributed to you). If the

adjustment. If you are an individual partner,

the foreign economic process requirements.

amount shown as code A exceeds the

report this amount on line 18 of Form 6251.

You may still qualify for your share of this

adjusted basis of your partnership interest

exclusion if the partnership's foreign trading

immediately before the distribution, the

Code B. This amount is your share of the

gross receipts for the tax year were $5

partnership's adjusted gain or loss. If you are

excess is treated as gain from the sale or

million or less. To qualify for this exclusion,

an individual partner, report this amount on

exchange of your partnership interest.

your foreign trading gross receipts from all

Generally, this gain is treated as gain from

line 17 of Form 6251.

sources for the tax year also must have been

the sale of a capital asset and should be

Code C. This amount is your share of the

$5 million or less. If you qualify for the

reported on Form 8949 and the Schedule D

partnership's depletion adjustment. If you are

exclusion, report the exclusion amount in

for your return. However, if you receive cash

an individual partner, report this amount on

accordance with the instructions for Income

or property in exchange for any part of a

line 9 of Form 6251.

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

partnership interest, the amount of the

applies. See Form 8873, Extraterritorial

distribution attributable to your share of the

Codes D and E. Oil, gas, & geothermal

Income Exclusion, for details.

partnership's unrealized receivable or

properties—gross income and deduc-

inventory items results in ordinary income

tions. The amounts reported on these lines

2. Partnership claimed the exclusion. If

(see Regulations section 1.751-1(a) and

include only the gross income (code D) from,

the partnership reports your share of foreign

Sale or Exchange of Partnership Interest,

and deductions (code E) allocable to, oil,

trading gross receipts but not the amount of

earlier). For details, see Pub. 541.

gas, and geothermal properties included in

the extraterritorial income exclusion, the

box 1 of Schedule K-1. The partnership

partnership met the foreign economic

The partnership will separately identify

should have attached a statement that

process requirements and claimed the

both of the following.

shows any income from or deductions

exclusion when figuring your share of

The FMV of the marketable securities

allocable to such properties that are included

partnership income. You also may need to

when distributed (minus your share of the

in boxes 2 through 13, 18, and 20 of

know the amount of your share of foreign

gain on the securities distributed to you).

Schedule K-1. Use the amounts reported

trading gross receipts from this partnership

The partnership's adjusted basis of those

and the amounts on the attached statement

to determine if you met the $5 million or less

securities immediately before the

to help you figure the net amount to enter on

exception discussed above for purposes of

distribution.

line 26 of Form 6251.

qualifying for an extraterritorial income

Decrease the adjusted basis of your

exclusion from other sources.

Code F. Other AMT items. Enter the

interest in the partnership (but not below

information on the statement attached by the

zero) by the amount of cash distributed to

Note. Upon request, the partnership should

partnership on the applicable lines of Form

you and the partnership's adjusted basis of

furnish you a copy of the partnership's Form

6251, Form 4626, or Schedule I (Form

the distributed securities. Advances or

8873 if there is a reduction for international

1041).

drawings of money or property against your

boycott operations, illegal bribes, kickbacks,

share are treated as current distributions

etc.

made on the last day of the partnership's tax

Box 18. Tax-Exempt

year.

Code Q. Other foreign transactions. On

Income and Nondeductible

a statement attached to Schedule K-1, the

Your basis in the distributed marketable

partnership will report any other information

Expenses

securities (other than in liquidation of your

on foreign transactions that you may need

interest) is the smaller of:

using code Q.

Code A. Tax-exempt interest income.

The partnership's adjusted basis in the

The partnership will attach a statement

Report on your return, as an item of

securities immediately before the distribution

that separately identifies any arrangement,

information, your share of the tax-exempt

increased by any gain recognized on the

along with the taxes paid or accrued in

interest received or accrued by the

distribution of the securities or

connection with the arrangement, in which

partnership during the year. Individual

The adjusted basis of your partnership

the partnership participates that would

partners include this amount on Form 1040,

interest reduced by any cash distributed in

qualify as a splitter arrangement under

line 8b. Increase the adjusted basis of your

the same transaction and increased by any

section 909 if one or more partners are

interest in the partnership by this amount.

gain recognized on the distribution of the

covered persons regarding an entity that

securities.

Code B. Other tax-exempt income.

took into account related income from the

If you received the securities in liquidation

Increase the adjusted basis of your interest

arrangement. The statement will also

of your partnership interest, your basis in the

in the partnership by the amount shown, but

indicate whether the partnership has taken

marketable securities is equal to the

do not include it in income on your tax return.

into account any related income from any

adjusted basis of your partnership interest

such splitter arrangement. See section 909

reduced by any cash distributed in the same

Note. The partnership will attach a

and the related regulations for rules

transaction and increased by any gain

statement for the amount included under

regarding splitter arrangements.

recognized on the distribution of the

code B that is exempt by reason of section

securities.

892 and describe the nature of the income.

Box 17. Alternative

Code B. Distribution subject to section

Code C. Nondeductible expenses. The

Minimum Tax (AMT) Items

737. If a partner contributed section 704(c)

nondeductible expenses paid or incurred by

built-in gain property within the last 7 years

the partnership are not deductible on your

Use the information reported in box 17 (as

and the partnership made a distribution of

tax return. Decrease the adjusted basis of

well as your adjustments and tax preference

property to that partner other than the

your interest in the partnership by this

items from other sources) to prepare your

previously contributed built-in gain property,

amount.

Form 6251, Alternative Minimum

the partner may be required to recognize

Tax—Individuals; Form 4626, Alternative

gain under section 737. This gain is in

Box 19. Distributions

Minimum Tax—Corporations; or Schedule I

addition to any gain recognized under

(Form 1041), Alternative Minimum

section 731 on the distribution.

Code A. Cash and marketable securities.

Tax—Estates and Trusts.

Code A shows the distributions the

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

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Partner'S Instructions For Schedule K-1 (Form 1065) - Partner'S Share Of Income, Deductions, Credits, Etc. (For Partner'S Use Only) - 2014 Page 13

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