New Schedules K-2 and K-3: Reporting Partners' International Share of Income, Deductions, Credits

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


Conducted on Tuesday, January 26, 2021

Recorded event now available

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Program Materials

This webinar will discuss new required Schedules K-2 and K-3 for reporting partners' income, deductions, and credits from foreign activity. Our panel of highly experienced tax specialists will explain each part of each schedule so that tax practitioners can more easily and efficiently meet this new reporting obligation.

Description

Designed before the 2017 Tax Act, the current Schedule K-1 has only one line for reporting all foreign transactions. This requires practitioners to attach narratives and supplemental schedules explaining foreign reportable items that partners must then interpret and report on their individual income tax returns. The IRS must manually review these same attachments.

The lack of consistency in reporting foreign items creates confusion for all. For partnerships, new Schedules K-2 and K-3 have been added for the 2021 tax year reported in 2022. Schedule K-2 is similar to the current Schedule K, and Schedule K-3 is similar to the current Schedule K-1, but both include foreign reportable items.

The new Schedule K-2 has nine parts, while Schedule K-3 has ten. These parts contain the partnership's share of current international transactions, foreign tax credit limitation information, IRC Section 250 deduction for FDII, GILTI inclusions, and other key information needed to properly report foreign income, credits, and deductions on partners' returns. These schedules will also allow the IRS to easily match the same items to the individual partners' individual income tax returns. For this reason, international tax practitioners must understand how to complete these new mandated schedules properly.

Listen as our panel of international tax experts explains how to properly complete new Schedules K-2 and K-3, including advice on preparing for this upcoming reporting obligation.

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Outline

  1. Background
  2. Schedule K-2: Parts I-IX
  3. Schedule K-3: Parts I-X
  4. Preparing for new reporting obligations

Benefits

The panel will review these and other key issues:

  • Preparing additional required attachments for specified international transactions in Part I
  • Complexities in reporting funds and private equity investments on Schedules K-2 and K-3
  • Properly reporting CFC income and GILTI inclusions in Part V
  • How foreign tax credits and income are recorded on the new schedules
  • Steps practitioners can take now to prepare for reporting international activity on Schedules K-2 and K-3

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

Wiesen, Dina
Dina A. Wiesen

Managing Director, National Tax Office, Passthroughs
Deloitte

Ms. Wiesen specializes in partnership taxation, specifically the use of partnerships and limited liability companies in...  |  Read More

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