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 Page 12

The amount of gain that is not

it did not meet the foreign economic

Code Q. Commercial Revitalization

recognized under section 1045.

process requirements. You may still

Deduction

If a partner purchases QSB stock, the

qualify for your share of this exclusion if

Follow the Instructions for Form 8582 for

name of the corporation that issued the

the partnership's foreign trading gross

commercial revitalization deductions from

replacement QSB stock, the date the

receipts for the tax year were $5 million or

rental real estate activities to figure how

stock was purchased, and the cost of the

less.

much of the deduction can be reported on

stock.

To qualify for this exclusion, your

Schedule E (Form 1040), line 28, column

If a partner treats the partner's interest

foreign trading gross receipts from all

(f).

in QSB stock that is purchased by a

sources for the tax year also must have

purchasing partnership as the partner's

been $5 million or less.

The commercial revitalization

replacement QSB stock, the name and

deduction is not available for any

Limited partners who qualify for the

EIN of the purchasing partnership, the

building placed in service after

exclusion. Report the extraterritorial

name of the corporation that issued the

CAUTION

December 31, 2009.

exclusion amount (Code O2) as a

replacement QSB stock, the partner's

deduction reducing the amount reported in

share of the cost of the QSB stock that

box 1 (see the box 1 instructions, earlier).

was purchased by the partnership, the

Codes R1 and R2. Interest

computation of the partner's adjustment to

Deduction Limitation for Corporate

General partners who qualify for the

basis with respect to that QSB stock, and

exclusion. Report the Code O2 amount

Partners

the date the stock was purchased by the

in accordance with the instructions for

partnership.

A corporate partner is required to treat its

box 9, Code A1, B1, or C1, whichever

share of interest income, interest expense,

applies. See Form 8873, Extraterritorial

Distribution of replacement QSB stock

and partnership liabilities as income,

Income Exclusion, for more information.

to a partner that reduces another part-

expense, and liabilities of the corporation

ner's interest in replacement QSB

Partnership claimed the exclusion. If

for purposes of the interest deduction

stock. You must recognize gain upon a

the partnership reports your share of

limitation under section 163(j). The

distribution of replacement QSB stock to

foreign trading gross receipts (Code O1)

corporation's share of interest income is

another partner that reduces your share of

but not the amount of the extraterritorial

reported in box 9 using code R1. Its share

the replacement QSB stock held by a

income exclusion, the partnership met the

of interest expense is reported using code

partnership. The amount of gain that you

foreign economic process requirements

R2. The amounts reported using code R1

must recognize is based on the amount of

and claimed the exclusion when figuring

and R2 are for information only, and are

gain that you would recognize upon the

your share of partnership income. You

included in amounts reported elsewhere

sale of the distributed replacement QSB

also may need to know the amount of your

on Schedule K-1. The corporation's share

stock for its FMV on the date of the

share of foreign trading gross receipts

of partnership liabilities is shown in the first

distribution, but not to exceed the amount

from this partnership to determine if you

column of Schedule K-1.

you previously deferred under section

met the $5 million or less exception

1045 with respect to the distributed

discussed above for purposes of

Code S1. Domestic Production

replacement QSB stock. If the partnership

qualifying for an extraterritorial income

distributed your share of replacement

Activities Information

exclusion from other sources.

QSB stock to another partner, the

The partnership must attach a statement

partnership should give you (a) the name

Upon request, the partnership

to Schedule K-1 that provides the

should furnish you a copy of the

of the corporation that issued the

information you need to figure the

partnership's Form 8873 if there is

replacement QSB stock, (b) the date the

CAUTION

domestic production activities deduction.

a reduction for international boycott

replacement QSB stock was distributed to

Use Form 8903, Domestic Production

another partner or partners, and (c) your

operations, illegal bribes, kickbacks, etc.

Activities Deduction, to figure this

share of the partnership's adjusted basis

deduction. See the Instructions for Form

and fair market value of the replacement

Code P. Inversion Gain

8903 for details.

QSB stock on such date.

The partnership must provide a statement

For more information, see Regulations

Code S2. Qualified Production

showing the amounts of each type of

section 1.1045-1.

Activities Income (QPAI)

income or gain that is included in inversion

gain. The partnership has included

Code N. Unrecaptured Section

Report the QPAI reported to you by the

inversion gain in income elsewhere on

partnership (in box 9 using Code S2) on

1250 Gain

Schedule K-1. Inversion gain is also

Form 8903, in the applicable column of

reported under Code P because your

Report this gain on line 11 of the

line 7.

taxable income and alternative minimum

Unrecaptured Section 1250 Gain

taxable income can’t be less than the

Worksheet in the Instructions for

Code S3. Employer's W-2 Wages

inversion gain. Also, your inversion gain

Schedule D (Form 1040). Do not report

(a) isn’t taken into account in figuring the

the gain on line 5 as stated on the

Report the portion of W-2 wages reported

amount of net operating loss (NOL) for the

worksheet.

to you by the partnership (in box 9 using

tax year or the amount of NOL that can be

Code S3) on Form 8903, line 17.

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

Codes O1 and O2. Extraterritorial

the amount of your credits, and (c) is

Code T. Section 409A Income

Income Exclusion

treated as income from sources within the

This is compensation to partners deferred

United States for the foreign tax credit.

Partnership did not claim the exclu-

under a section 409A nonqualified

See section 7874 for details.

sion. If the partnership reports your share

deferred compensation plan that doesn’t

of foreign trading gross receipts (Code

meet the requirements of section 409A.

O1) and the extraterritorial income

This amount is also reported in box 9

exclusion (Code O2), the partnership was

using Code F. This amount is subject to

not entitled to claim the exclusion because

interest and additional tax to be reported

Instructions for Schedule K-1 (1065-B)

-12-

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