2022 Form 1065 K-1s (K-2s and K-3s)

Author: Bradley Burnett

On recent Forms 1065, Schedules K-1, K-2 and K-3 and in related instructions, the IRS has launched massive new reporting requirements re: negative tax basis capital accounts, at-risk activities, passive activities, partner level built-in gains, foreign activities and many more. Chaos has resulted.

In this course, you’ll learn:

1. How partnerships (and S Corps) face the at-risk (and passive) activity reporting blues (and what to do about them)
2. Negative tax basis capital account reporting – What must be computed and disclosed (and by when)
3. Plethora of other new info required (built-in gains lying in wait, disregarded entity partners, international activity, foreign tax credit and more)

Publication Date: October 2022

Designed For
Return preparers, tax planners and taxpayers desiring to keep up with IRS’s Form 1065 Schedule K-1 reporting requirements.

Topics Covered

• Form 1065 and K-1 — New reporting requirements in depth
• Disregarded entity partners — Disclosures, depth of implications
• 3 year average annual gross receipts test — 4 places it matters
• Negative capital accounts — Tax basis reporting
• Basis in partner's partnership interest — New inquiries, new treacheries
• Disguised sales — New question as to partner disclosure
• Aggregation of at-risk activities — New disclosures with sticky implications
• Grouping of passive activities — New disclosure and detail required
• Miscellaneous — Capital accounts, §754 elections with §743(b) adjustments, sales of partnership interests, partnerships with foreign partners, tiered partnership debt disclosure issues, and so on

Learning Objectives

• Recognize the reporting demands of Form 1065 Schedule K-1
• Identify when the IRS first introduced Schedule K-2 and K-3
• Identify the new schedule that relates to a partners distribute share of international items
• Identify the per partner per month FTF penalty for a partnership return required to be filed in 2023 (not to exceed 12 months)
• Identify the IRS form that relates to a notice of inconsistent treatment or Administrative Adjustment Request (AAR)
• Identify the part of Schedule K-2 that relates to the Foreign Tax Credit Limitation
• Identify the item of income that is sourced to the residence of the payer
• Identify the IRC Section that prescribes requirements related to the failure to furnish correct payee statements

Level
Update

Instructional Method
Self-Study

NASBA Field of Study
Taxes (3 hours)

Program Prerequisites
Basic understanding of tax preparation.

Advance Preparation
None