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) - 2016
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132016
Department of the Treasury
Internal Revenue Service
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)
General partners must make their own
unrealized receivables (as defined in
Section references are to the Internal Revenue
Code unless otherwise noted.
determinations as to whether the activities
section 751(c)) or inventory items (as
are passive for them. Therefore,
defined in section 751(d)).
Future Developments
partnership items from trade or business,
The written notice to the partnership
rental real estate, and other rental
For the latest information about
must include the names and addresses of
activities are separately reported for each
developments related to Schedule K-1
both parties to the exchange, the
activity in box 9.
(Form1065-B) and its instructions, such as
identifying numbers of the transferor and
legislation enacted after they were
(if known) of the transferee, and the
Income, etc., from other activities
published, go to
(investment and portfolio income and
exchange date.
deductions) are reported in boxes 2, 3, 4b,
General Instructions
An exception to this rule is made for
and 6 for both limited and general
sales or exchanges of publicly traded
partners.
partnership interests for which a broker is
Purpose of Schedule K-1
required to file Form 1099-B, Proceeds
Errors
The partnership uses Schedule K-1 to
From Broker and Barter Exchange
You must report partnership items shown
report your share of the partnership's
Transactions.
income, deductions, credits, etc. Keep it
on your Schedule K-1 (and any attached
If a partner is required to notify the
for your records. Don’t file it with your tax
statements) the same way that the
partnership of a section 751(a) exchange
return. The partnership has filed a copy
partnership treated the items on its return.
but fails to do so, the partner will be
with the IRS.
If you believe the partnership has made an
subject to a penalty for each such failure.
error on your Schedule K-1, notify the
However, no penalty will be imposed if the
You are liable for tax on your share of
partnership. Don’t change any items on
partner can show that the failure was due
the partnership income, whether or not
your copy of Schedule K-1. Generally, an
to reasonable cause and not willful
distributed. Include your share on your tax
adjustment to correct an error will take
neglect.
return if a return is required. Use these
effect for the tax year in which the
instructions to help you report the items
partnership actually makes the
Gain or loss from the disposition
shown on Schedule K-1 on your tax return.
of your partnership interest is
adjustment. However, if the error involves
TIP
generally net investment income
a change to your share of a partnership
The amount of loss and deduction that
item, the partnership should file an
under section 1411 and may be subject to
you can claim on your tax return may be
amended partnership return and send you
the net investment income tax. See Form
less than the amount reported on
a corrected Schedule K-1.
8960, Net Investment Income
Schedule K-1. It is the partner's
Tax—Individuals, Estates, and Trusts, and
If the treatment on your original or
responsibility to consider and apply any
its instructions for information about how
amended return is inconsistent with the
applicable limitations. See
Limitations on
to figure and report the tax due.
partnership's treatment, you may be
Losses, Deductions, and
Credits, later, for
subject to the accuracy-related penalty.
more information.
Nominee Reporting
This penalty is in addition to any tax that
Electing Large
results from making your amount or
Any person who holds, directly or
treatment of the item consistent with that
Partnerships (ELPs)
indirectly, an interest in a partnership as a
shown on the partnership's return. Any
nominee for another person must furnish a
This partnership has elected simplified
deficiency that results from making the
written statement to the partnership by the
reporting requirements intended to make it
amounts consistent may be assessed
last day of the month following the end of
simpler for you to report your share of
immediately.
the partnership's tax year. This statement
partnership income, credits, deductions,
must include the name, address, and
Sale or Exchange of
etc. In most cases, income, capital gains,
identifying number of the nominee and
credits, and deductions are combined at
Partnership Interest
such other person, description of the
the partnership level so that the number of
partnership interest held as nominee for
Generally, a partner who sells or
partnership items separately reported to
that person, and other information
exchanges a partnership interest in a
partners is reduced. Most limitations and
required by Temporary Regulations
section 751(a) exchange must notify the
elections affecting partnership income are
section 1.6031(c)-1T. A nominee who fails
partnership, in writing, within 30 days of
made by the electing large partnership.
to furnish this statement must furnish to
the exchange (or, if earlier, by January 15
the person for whom the nominee holds
For limited partners, income and other
of the calendar year following the calendar
the partnership interest a copy of
items from the partnership's trade or
year in which the exchange occurred). A
Schedule K-1 and related information
business and rental activities are treated
“section 751(a) exchange” is any sale or
within 30 days of receiving it from the
as being from a trade or business that is a
exchange of a partnership interest in
partnership.
single passive activity. These items are
which any money or other property
reported in boxes 1, 4a, and 5, with most
received by the partner in exchange for
A nominee who fails to furnish when
credits being reported in boxes 7 and 8.
that partner's interest is attributable to
due all the information required by
Dec 22, 2016
Cat. No. 26141W
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