Nov 17, 2021
In June 2021, the IRS released final versions of two new
international-related schedules that are being added to passthrough
entity returns:
- Schedule K-2, Partners' Distributive Share Items —
International
- Schedule K-3, Partner's Share of Income, Deductions,
Credits, etc. — International
The new international-related schedules will be required for
2021 partnership and S corporation returns and 2021 Schedules K-1,
Partner's Share of Income, Deductions, Credits, etc.
In this Tax Section Odyssey episode, April Walker, CPA, CGMA,
from the AICPA Tax Section, welcomes Amy Miller, JD, CPA, from the
AICPA Tax Policy and Advocacy team, David Sites, CPA, Managing
Partner of International Tax Services — Grant Thornton, Kyle
Dawley, JD, CPA, Principal — Clifton Larson Allen, and Tim Chan,
CPA, Managing Director — KPMG, to discuss the new schedules and
related past and future AICPA efforts.
What you’ll learn in this
episode
- Background of the AICPA Foreign Passthrough Reporting Task
Force and its past activities (1.19)
- Summary of the September 2020 AICPA comment letter (2.08)
- AICPA recommendations that were adopted by the U.S. Treasury
and IRS (3.24)
- What the IRS is trying to achieve with the new schedules
(4.20)
- Timing of schedule furnishment to partners (6.29)
- Thoughts on potential postponement of the Schedules K-2 and K-3
(8.06)
- Status of form instructions and major issues that practitioners
and clients need to be aware of (10.37)
- Parts II and III reporting for those with 100% U.S. source
activity (14.37)
- Country-by-country reporting requirement (16.49)
- Interaction between international forms (e.g., Forms 8858 and
5471) and new reporting requirements (18.00)
- Filing requirements for entities that are not required to file
Forms 1065 or 8865 (20.37)
- What an upper-tier partnership should do if a lower-tier
partnership does not provide any or all of Schedule K-3 information
(21.30)
- Next steps for the AICPA Foreign Passthrough Reporting Task
Force (23.00)
AICPA resources
Other resources
- Notice
2021-39 — The IRS announced draft 2021 instructions for
Schedules K-2 and K-3 for partnership and S corporation Forms 1065,
1120-S and 8865 as well as transition relief from penalties for any
incorrect or incomplete reporting on the schedules.
- About
Form 1065 and About Form
1120-S — The recent developments section provides updates as
Schedules K-2 and K-2 are finalized for the 2021 tax year.
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