Form 8865: Reporting Foreign Partnership Interests

Determining Taxpayer Categories Based on Control or Ownership, Calculating Allocable Share of Foreign Income and Tax Basis Capital

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, June 1, 2021

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide tax advisers and return preparers with a practical guide to completing Form 8865, Return of U.S. Persons with Respect to Certain Foreign Partnerships. The panel will discuss how to correctly identify the taxpayer category, determine the allocable share of foreign income, comply with tax basis capital reporting requirements, and how to avoid potentially costly mistakes.

Description

U.S. persons who own any "qualifying interest" in a foreign partnership must report those interests on Form 8865, Return of U.S. Persons with Respect to Certain Foreign Partnerships. Failure to accurately file Form 8865 can result in harsh penalties. The form requires data presentation that ranges from simple to highly involved on the return and its associated schedules.

The Code lists four categories of taxpayers who are subject to Form 8865 filing requirements, based on the taxpayer's level of ownership or control over the foreign partnership or engagement in specified transactions with the entity. Determining which category a taxpayer fits into is a complicated exercise for tax advisers and compliance professionals.

IRS' emphasis on international tax compliance makes proper compliance with this return a high priority. The Service has been automatically imposing hefty penalties on late and non-filers in the past few years, and this trend will almost certainly continue as the IRS continues its focus on foreign tax reporting failures.

Listen as our panel of experienced tax advisers identifies the most difficult aspects of preparing Form 8865 for reporting foreign partnership ownership and offers tools to meet those challenges. The panel will outline approaches for you to correctly identify taxpayer category, determine the allocable share of foreign income, report tax basis capital, and stay ahead of potential audit red flags and other errors.

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Outline

  1. Purpose of Form 8865
  2. Categories of taxpayers subject to Form 8865 filing requirements
    1. Category 1: Control (50 percent test)
    2. Category 2: U.S. controlled partnership
    3. Category 3: Contribution of property to a foreign partnership
    4. Category 4: Other filing requirements
  3. Preparation of Form 8865
  4. Tax basis capital reporting
  5. Schedules
  6. Difficult compliance issues related to Form 8865
  7. IRS enforcement and audit environment to date

Benefits

The panel will discuss these and other important topics:

  • Determining the categories of U.S. persons required to file Form 8865
  • Reporting the income and expense statements and balance sheets for taxpayers with 10 percent or more interest in a foreign partnership or flow-through LLC
  • Grasp key U.S. international tax reporting rules and obligations of U.S. persons with interests in foreign partnerships
  • Tax basis capital reporting using current guidelines
  • Avoid audit red flags and common, serious errors that the Service looks for in Form 8865 and its schedules

Faculty

Dougherty, Alison
Alison N. Dougherty, J.D., LL.M., CPA

Partner
Aronson

Ms. Dougherty specializes in U.S. international tax reporting, compliance, consulting, planning, and structuring as a...  |  Read More

Kennedy-C. Edward
C. Edward Kennedy, Jr., CPA, JD

Managing Director
C Edward Kennedy Jr

Mr. Kennedy has more than 36 years of experience dealing with a variety of international tax matters, specializing in...  |  Read More

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