Table of Contents
- General Instructions
- Specific Instructions
- Schedule A. Constructive Ownership of Partnership Interest
- Schedule A-1. Certain Partners of Foreign Partnership
- Schedule A-2. Affiliation Schedule
- Schedule B. Income Statement—Trade or Business Income
- Schedule D. Capital Gains and Losses
- Schedules K and K-1. Partners' Distributive Share Items
- Schedule L. Balance Sheets per Books
- Schedule M. Balance Sheets for Interest Allocation
- Schedule M-1. Reconciliation of Income (Loss) per Books With Income (Loss) per Return
- Schedule M-2. Analysis of Partners' Capital Accounts
- Schedule N. Transactions Between Controlled Foreign Partnership and Partners or Other Related Entities
- Schedule O. Transfer of Property to a Foreign Partnership
- Schedule P. Acquisitions, Dispositions, and Changes of Interests in a Foreign Partnership
- Privacy Act and Paperwork Reduction Act Notice.
The specific instructions for Schedules B, K, K-1, M-1, and M-2 are not included in these instructions. If you are required to complete these schedules for Form 8865, use the instructions for the corresponding schedules of Form 1065, U.S. Return of Partnership Income, (or Form 1065-B, U.S. Return of Income for Electing Large Partnerships, if the foreign partnership is an electing large partnership). See the general instructions for these schedules, later, for more information.
|If you are completing Form 8865||Then use the instructions for Forms 1065/1065-B:|
|Schedule B||Form 1065, page 1 (income and deductions); Form 1065-B, Parts I and II|
|Schedules K and K-1||Schedules K and K-1|
|Schedule L||Schedule L|
|Schedule M-1||Schedule M-1|
|Schedule M-2||Schedule M-2|
If you are reporting capital gains and losses, use Schedule D (Form 1065). See the Instructions for Schedule D (Form 1065).
Use Form 8865 to report the information required under section 6038 (reporting with respect to controlled foreign partnerships), section 6038B (reporting of transfers to foreign partnerships), or section 6046A (reporting of acquisitions, dispositions, and changes in foreign partnership interests).
A U.S. person qualifying under one or more of the Categories of Filers (see below) must complete and file Form 8865. These instructions and the Filing Requirements for Categories of Filers chart, later, explain the information, statements, and schedules required for each category of filer. If you qualify under more than one category for a particular foreign partnership, you must submit all the items required for each category under which you qualify.
If you qualify as a Category 2 and a Category 3 filer, you must submit all the schedules required of Category 2 filers (page 1 of Form 8865, Schedules A, A-2, N, and K-1) plus any additional schedules that Category 3 filers are required to submit (Schedules A-1 and O).
Complete a separate Form 8865 and the applicable schedules for each foreign partnership.
File the 2014 Form 8865 with your income tax return for your tax year beginning in 2014.
If a Form 8832, Entity Classification Election, was filed for this entity for the current tax year, see When and Where To File in the instructions for Form 8832 to determine if you are required to attach a copy of the Form 8832 to the tax return to which the Form 8865 is being attached.
|Filing Requirements||Category of Filers|
|Identifying information—(page 1 of Form 8865)||✓||✓||✓||✓|
|Schedule A—Constructive Ownership of Partnership Interest||✓||✓||✓||✓|
|Schedule A-1—Certain Partners of Foreign Partnership||✓||✓|
|Schedule A-2—Affiliation Schedule||✓||✓||✓||✓|
|Schedule B—Income Statement—Trade or Business Income||✓|
|Schedule K—Partners' Distributive Share Items||✓|
|Schedule L—Balance Sheets per Books||✓|
|Schedule M—Balance Sheets for Interest Allocation||✓|
|Schedule M-1—Reconciliation of Income (Loss) per Books With Income (Loss) per Return||✓|
|Schedule M-2—Analysis of Partners' Capital Accounts||✓|
|Schedule N—Transactions Between Controlled Foreign Partnership and Partners or Other Related Entities||✓||✓|
|Schedule D— Schedule D (Form 1065), Capital Gains and Losses||✓|
|Schedule K-1—Partner's Share of Income, Deductions, Credits, etc. (direct partners only)||✓||✓|
|Schedule O—Transfer of Property to a Foreign Partnership||✓|
|Schedule P—Acquisitions, Dispositions, and Changes of Interests in a Foreign Partnership||✓|
Owned directly or constructively at least a 10% interest in the foreign partnership immediately after the contribution, or
The value of the property contributed (when added to the value of any other property contributed to the partnership by such person, or any related person, during the 12-month period ending on the date of transfer) exceeds $100,000.
A U.S. person that acquires a foreign partnership interest has a reportable event if:
The person did not own a 10% or greater direct interest in the partnership and as a result of the acquisition, the person owns a 10% or greater direct interest in the partnership (for example, from 9% to 10%). For purposes of this rule, an acquisition includes an increase in a person's direct proportional interest (see Change in a proportional interest, later); or
Compared to the person's direct interest when the person last had a reportable event, after the acquisition the person's direct interest has increased by at least a 10% interest (for example, from 11% to 21%).
A U.S. person that disposes of a foreign partnership interest has a reportable event if:
The person owned a 10% or greater direct interest in the partnership before the disposition and as a result of the disposition the person owns less than a 10% direct interest (for example, from 10% to 8%). For purposes of this rule, a disposition includes a decrease in a person's direct proportional interest; or
Compared to the person's direct interest when the person last had a reportable event, after the disposition the person's direct interest has decreased by at least a 10% interest (for example, from 21% to 11%).
A U.S. person has a reportable event if compared to the person's direct proportional interest the last time the person had a reportable event, the person's direct proportional interest has increased or decreased by at least the equivalent of a 10% interest in the partnership.
If the U.S. person owned at least a 10% direct interest in the foreign partnership on December 31, 1999, then comparisons should be made to the person's direct interest on December 31, 1999. Once the person has a reportable event after December 31, 1999, future comparisons should be made by reference to the last reportable event.
A statement that the person qualified as a Category 1 filer, but is not submitting Form 8865 under the multiple Category 1 filers exception.
The name, address, and identifying number (if any) of the foreign partnership of which the person qualified as a Category 1 filer.
A statement that the filing requirement has been or will be satisfied.
The name and address of the person filing Form 8865 for this partnership.
The Internal Revenue Service Center where the Form 8865 must be filed (or indicate “e-file” if the Form 8865 has been or will be filed electronically).
Form 8865 is filed by the U.S. person(s) through which the indirect partner constructively owns an interest in the foreign partnership,
The U.S. person through which the indirect partner constructively owns an interest in the foreign partnership is also a constructive owner and meets all the requirements of this constructive ownership filing exception, or
Form 8865 is filed for the foreign partnership by another Category 1 filer under the multiple Category 1 filers exception.
A statement that the indirect partner was required to file Form 8865, but is not doing so under the constructive owners exception;
The names and addresses of the U.S. persons whose interests the indirect partner constructively owns;
The name and address of the foreign partnership for which the indirect partner would have had to have filed Form 8865, but for this exception; and
If the indirect partner is a domestic corporation, a statement setting forth all the information that the indirect partner would have had to provide in response to questions 8a and 8b on Form 8865. See Item G8. Separate Units Note, later, for more information.
Partner A does not own an interest in FPS, a foreign partnership. Partner A transfers property to FPS in exchange for a 15% direct interest. Partner A qualifies as a Category 3 filer because he transferred property to a foreign partnership and owned at least a 10% interest in FPS immediately after the contribution. Partner A is also a Category 4 filer because he did not own a 10% or greater direct interest in FPS and as a result of the acquisition now owns a 10% or greater direct interest in FPS. If Partner A properly reports the contribution on Form 8865 as a Category 3 filer, Partner A is not required to report his acquisition of the 15% interest in FPS as a Category 4 filer.
If a foreign partnership files Form 1065 or Form 1065-B for its tax year, Category 1 and 2 filers may use a copy of the completed Form 1065 or 1065-B schedules in place of the equivalent schedules of Form 8865.
If you file Form 8865 with an electronically filed income tax return, see the electronic filing publications identified in the instructions for your income tax return for more information.
See the first paragraph under General Instructions, earlier, for the Form 1065/1065-B schedules that are equivalent to the Form 8865 schedules.
Partner A is a Category 1 filer with respect to FPS, a foreign partnership during the 2014 tax year. FPS completes and files a Form 1065 for its 2014 tax year. Instead of completing Schedules B, K, L, M-1, M-2, and K-1 of Form 8865, Partner A may attach to its Form 8865 page 1 of Form 1065 and Form 1065 Schedules K, L, M-1, M-2, and K-1 (including the Schedules K-1 for Partner A and all other U.S. persons owning 10% or greater direct interests in FPS). Partner A must complete the following items and schedules on Form 8865.
The first page,
Schedule M, and
Partner A is a Category 2 filer with respect to FPS, a foreign partnership. If FPS completes and files a Form 1065 for its 2014 tax year, Partner A may file with Form 8865 the Schedule K-1 (Form 1065) that it receives from the partnership instead of Schedule K-1 (Form 8865). Partner A must complete the following items and schedules on Form 8865.
The first page,
Schedule A-2, and
Attach Form 8865 to your income tax return (or, if applicable, partnership or exempt organization return) and file both by the due date (including extensions) for that return. If you do not have to file an income tax return, you must file Form 8865 separately with the IRS at the time and place you would be required to file an income tax return (or, if applicable, a partnership or exempt organization return). See below for penalties that may apply if you do not file Form 8865 on time.
50% of the capital,
50% of the profits, or
50% of the deductions or losses.
10% of the capital,
10% of the profits, or
10% of the deductions or losses.
Also, an individual is considered to own an interest owned directly or indirectly by or for his or her family. The family of an individual includes only that individual's spouse, brothers, sisters, ancestors, and lineal descendants. An interest will be attributed from a nonresident alien individual under the family attribution rules only if the person to whom the interest is attributed owns a direct or indirect interest in the foreign partnership under section 267(c)(1) or (5).
A $10,000 penalty is imposed for each tax year of each foreign partnership for failure to furnish the required information within the time prescribed. If the information is not filed within 90 days after the IRS has mailed a notice of the failure to the U.S. person, an additional $10,000 penalty (per foreign partnership) is charged for each 30-day period, or fraction thereof, during which the failure continues after the 90-day period has expired. The additional penalty is limited to a maximum of $50,000 for each failure.
Any person who fails to furnish all of the information required within the time prescribed will be subject to a reduction of 10% of the foreign taxes available for credit under sections 901, 902, and 960. If the failure continues 90 days or more after the date the IRS mails notice of the failure, an additional 5% reduction is made for each 3-month period, or fraction thereof, during which the failure continues after the 90-day period has expired. See section 6038 (and the underlying regulations) for the maximum reduction, the exception due to reasonable cause, and for limits on the amount of these penalties.
Criminal penalties under sections 7203, 7206, and 7207 may apply for failure to file or for filing false or fraudulent information.
Overrides or modifies any provision of the Internal Revenue Code and
Causes (or potentially causes) a reduction of any tax incurred at any time.
If you file a Form 8865 that you later determine is incomplete or incorrect, file a corrected Form 8865 with an amended tax return following the instructions for the return with which you originally filed Form 8865. Write “corrected” at the top of the form and attach a statement identifying and explaining the changes.
All information must be in English. All amounts must be stated in U.S. dollars.
If the information required in a given section exceeds the space provided within that section, attach separate sheets to provide the remaining information, using the same size and format as the printed forms.
Enter in the space below the title of Form 8865 the tax year of the foreign partnership that ended with or within the tax year of the person filing this form. Category 1 or 2 filers must report information for the tax year of the foreign partnership that ends with or within their tax years. A Category 3 or 4 filer must report on Schedules O or P, respectively, transactions that occurred during that filer's tax year (rather than during the partnership's tax year).
Enter the identifying number of the person filing this return. Use an employer identification number (EIN) to identify partnerships, corporations, and estates or trusts. For individuals, use a social security number (SSN) or other identification number.
Include the suite, room, or other unit number after the street address. If the Post Office does not deliver mail to the street address and the U.S. person has a P.O. box, show the box number instead.
Check the box for each category that describes the person filing the form. If more than one category applies, check all boxes that apply. See Categories of Filers, earlier.
Enter the filer's share of nonrecourse liabilities, partnership-level qualified nonrecourse financing, and other liabilities. Nonrecourse liabilities are those liabilities of the partnership for which no partner bears the economic risk of loss. The extent to which a partner bears the economic risk is determined under the rules of Regulations section 1.752-2.
"Qualified nonrecourse financing" generally includes financing:
For which no one is personally liable for repayment,
That is borrowed for use in an activity of holding real property, and
That is borrowed from a qualified person (defined in section 49(a)(1)(D)(iv)) or is lent or guaranteed by a federal, state, or local government.
See section 465(b)(6) for more information on qualified nonrecourse financing.
If the person filing the form is a member of a consolidated group, but not the parent, list the name, address, and EIN of the filer's common parent.
For the foreign partnership's address, enter the city or town, state or province, and the foreign country in that order. Follow the foreign country's practice in placing the postal code in the address. Do not abbreviate the country name. If the partnership receives its mail in care of a third party (such as an accountant or attorney), enter “C/O” followed by the third party's name and street address or P.O. box.
A reference ID number (defined below) is required on item F2(b) only in cases where no EIN was entered on item F2(a) for the foreign partnership. However, filers are permitted to enter both an EIN on item F2(a) and a reference ID number on item F2(b). If applicable, enter the reference ID number you have assigned to the foreign partnership identified on item F1.
A “reference ID number” is a number established by or on behalf of the U.S. person identified at the top of page 1 of the form that is assigned to a foreign partnership with respect to which Form 8865 reporting is required. These numbers are used to uniquely identify the foreign partnership in order to keep track of the partnership from tax year to tax year.
The reference ID number must meet the requirements set forth below.
Because reference ID numbers are established by or on behalf of the U.S. person filing Form 8865, there is no need to apply to the IRS to request a reference ID number or for permission to use these numbers.
Generally, the reference ID number assigned to a foreign partnership on Form 8865 has relevance only on Form 8865, its schedules, and any other form that is attached to or associated with Form 8865, and should not be used with respect to that foreign partnership on other IRS forms. However, the foreign partnership's reference ID number should also be entered on Form 8858, Information Return of U.S. Persons With Respect To Foreign Disregarded Entities, if the foreign partnership is listed as a tax owner of a foreign disregarded entity on Form 8858. See the instructions for Form 8858, line 3c(2), for more information.
The reference ID number that is entered in item F2(b) must be alphanumeric (defined below) and no special characters or spaces are permitted. The length of a given reference ID number is limited to 50 characters.
For these purposes, the term “alphanumeric” means the entry can be alphabetical, numeric, or any combination of the two.
The same reference ID number must be used consistently from tax year to tax year with respect to a given foreign partnership. If for any reason a reference ID number falls out of use (for example, the foreign partnership no longer exists due to disposition or liquidation), the reference ID number used for that foreign partnership cannot be used again for another foreign partnership for purposes of Form 8865 reporting.
There are some situations that warrant correlation of a new reference ID number with a previous reference ID number when assigning a new reference ID number to a foreign partnership. For example:
In the case of a merger or acquisition, a Form 8865 filer must use a reference ID number which correlates the previous reference ID number with the new reference ID number assigned to the foreign partnership.
In the case of an entity classification election that is made on behalf of the foreign partnership on Form 8832, Regulations section 301.6109-1(b)(2)(v) requires the foreign partnership to have an EIN for this election. For the first year that Form 8865 is filed after an entity classification election is made on behalf of the foreign partnership on Form 8832, the new EIN must be entered on item F2(a) of Form 8865 and the old reference ID number must be entered on item F2(b). In subsequent years, the filer may continue to enter both the EIN on item F2(a) and the reference ID number on item F2(b), but must enter at least the EIN on item F2(a).
You must correlate the reference ID numbers as follows: New reference ID number (space) Old reference ID number. If there is more than one old reference ID numbers, you must enter a space between each such number. As indicated above, the length of a given reference ID number is limited to 50 characters and each number must be alphanumeric and no special characters are permitted.
This correlation requirement applies only to the first year the new reference ID number is used.
Enter the foreign partnership's functional currency. See sections 985 through 989 and the regulations thereunder. If the partnership had more than one qualified business unit (QBU), attach a statement identifying each QBU, its country of operation, and its functional currency. A QBU is any separate and clearly identified unit of a trade or business of the partnership which maintains separate books and records.
When translating functional currency to U.S. dollars, you must use the method specified in sections 985 through 989 and the regulations thereunder. But, regardless of the specific method required, all exchange rates must be reported using a “divide-by convention” rounded to at least four places. That is, the exchange rate must be reported in terms of the amount by which the functional currency amount must be divided in order to reflect an equivalent amount of U.S. dollars. As such, the exchange rate must be reported as the units of foreign currency that equal one U.S. dollar, rounded to at least four places. Do not report the exchange rate as the number of U.S. dollars that equal one unit of foreign currency.
You must round the result to more than four places if failure to do so would materially distort the exchange rate or the equivalent amount of U.S. dollars.
If the foreign partnership was required to file Form 1065 or Form 1065-B for the partnership's tax year listed at the top of page 1 (Form 8865), check the applicable box and enter the IRS Service Center where the form was or will be filed (or enter “e-file” if the form was or will be filed electronically). Also, check the applicable box(es) if the foreign partnership was required to file (for its taxable year) Form 8804, Annual Return for Partnership Withholding Tax (Section 1446), or (for the calendar year ending with or within the foreign partnership's tax year)Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons.
Only Category 1 and 2 filers are required to complete item G6.
Enter the number of Forms 8858 attached to Form 8865. A disregarded entity is an entity that is disregarded as an entity separate from its owner under Regulations section 301.7701-2(c)(2). The partnership is the tax owner of the foreign disregarded entity if it is treated as owning the assets and liabilities of the foreign disregarded entity for purposes of U.S. income tax law.
If the foreign partnership is the tax owner of a foreign disregarded entity and you are a Category 1 or 2 filer of Form 8865, complete and attach Form 8858 to Form 8865. For more information, see the Instructions for Form 8858.
Only Category 1 filers (or indirect partners that are filing the constructive ownership exception statement) are required to answer items G8a and G8b if applicable. Answer "Yes" to item G8a if the filer is a domestic corporation and (1) the partnership is a hybrid entity or (2) the filer, through its interest in the partnership, indirectly owns an interest in a hybrid entity or indirectly carries on a business operation outside the United States that, if carried on by a U.S. person, would constitute a foreign branch (as defined in Regulations section 1.367(a)-6T(g)(1)). Under Regulations section 1.1503(d)-1(b)(3), a hybrid entity means an entity that is not taxable as an association for U.S. federal tax purposes, but is subject to an income tax of a foreign country as a corporation (or otherwise at the entity level) either on its worldwide income or on a residence basis. If the answer to item G8a is "No," skip item G8b.
See Regulations section 1.1503(d)-1(b)(4) for more information on separate units, including information on when two or more individual separate units are combined and treated as one separate unit. If you answer “Yes” to item G8b, then, for each separate unit that has a dual consolidated loss, attach a statement that sets forth (1) the identity and country of operation of the separate unit or, in the case of a combined separate unit, the identity and country of operation of each individual separate unit that is treated as part of the combined separate unit, and (2) the amount of the dual consolidated loss. See Regulations section 1.1503(d)-5 for rules on determining the amount of a dual consolidated loss attributable to a separate unit.
Only Category 1 filers are required to answer item G9.
Answer “Yes” to item G9 if the partnership meets both of the requirements shown on the form. Total receipts is defined as the sum of gross receipts or sales (Schedule B, line 1a); all other income reported on Schedule B (lines 4 through 7); income reported on Schedule K, lines 3a, 5, 6a, and 7; income or net gain reported on Schedule K, lines 8, 9a, 10 and 11; and income or net gain reported on Form 8825, Rental Real Estate Income and Expenses of a Partnership or an S Corporation, lines 2, 19, and 20a.
All filers must complete Schedule A. Check box a if the person filing the return owns a direct interest in the foreign partnership. Check box b if the person filing the return constructively owns an interest in the foreign partnership. See Constructive ownership, earlier.
All Category 1 and certain Category 3 filers must complete Schedule A-1. Any person already listed on Schedule A is not required to be listed again on Schedule A-1.
Each U.S. person that owned a 10% or greater direct interest in the foreign partnership during the Category 3 filer's tax year, and
Any other person related to the Category 3 filer that was a direct partner in the foreign partnership during that tax year.
All filers must complete Schedule A-2. List on Schedule A-2 all partnerships (foreign or domestic) in which the foreign partnership owned a direct interest, or a 10% indirect interest (under the rules of section 267(c)(1) and (5)) during the partnership tax year listed at the top of page 1, Form 8865.
You do not need to complete Form 8865, Schedule B, if you have attached a copy of Form 1065, page 1, or Form 1065-B, Parts I and II, filed by the foreign partnership.
All Category 1 filers must complete Form 8865, Schedule B.
For specific instructions for Form 8865, Schedule B, use the instructions for Form 1065, lines 1a through 21, (income and deductions). If the foreign partnership files Form 1065-B, use the Instructions for Form 1065-B, Parts I and II.
All Form 8865 Category 1 filers must complete Schedule D (Form 1065), Capital Gains and Losses, to report sales or exchanges of capital assets, capital gain distributions, and nonbusiness bad debts. See the Instructions for Schedule D (Form 1065). You do not need to complete a separate Schedule D (Form 1065) if you have attached to Form 8865 a copy of the Schedule D from Form 1065 or Form 1065-B filed by the foreign partnership.
You do not need to complete Form 8865, Schedules K or K-1, if you have attached to Form 8865 a copy of the Schedules K or K-1 from Form 1065 or Form 1065-B filed by the foreign partnership.
Form 8865, Schedule K is a summary schedule of all of the partners' shares of the partnership income, credits, deductions, etc. Only Category 1 filers must complete Form 8865, Schedule K.
Form 8865, Schedule K-1 is used to report a specific partner's share of the partnership income, deductions, credits, etc.
All Category 1 and 2 filers must complete Form 8865, Schedule K-1 for any direct interest they hold in the partnership. A Category 1 or 2 filer that does not own a direct interest is not required to complete Form 8865, Schedule K-1.
Category 1 filers must also complete Form 8865, Schedule K-1 for each U.S. person that directly owns a 10% or greater direct interest in the partnership.
Provide the partner's beginning and year-end percentage interest in partnership profits, losses, capital, or deductions. These percentages should include any interest constructively owned by the filer.
Complete boxes 1 through 20 for any direct interest that the partner owns in the partnership.
Partner A owns a 45% direct interest in a foreign partnership (FPS). Partner A also owns 100% of the stock of a domestic corporation (DC), which owns a 10% direct interest in FPS. Therefore, Partner A is considered to own a 55% interest in FPS and is thus a Category 1 filer. When Partner A completes Form 8865, Schedule K-1 for itself, Partner A must report the distributive share of items allocated to Partner A's direct interest of 45% but not any items allocated to DC's 10% interest. When Partner A completes Form 8865, Schedule K-1 for DC (which Partner A must do because DC owns a direct 10% interest), Partner A must report on DC's Form 8865, Schedule K-1 only items allocated to DC's direct 10% interest.
Although the partnership is not subject to income tax, the partners are liable for tax on their shares of the partnership income, whether or not distributed, and must include their share of such items on their tax returns.
Allocations of income, gains, losses, deductions, or credits among the partners generally should be made according to the partnership agreement. See section 704 and the regulations thereunder.
On each Form 8865, Schedule K-1, enter the information about the partnership and the partner in Parts I and II (items A through F). For Form 8865, Schedule K-1, items E and F, see the instructions for the corresponding Schedule K-1 (Form 1065), items J and L in the Instructions for Form 1065 under the heading Specific Instructions (Schedule K-1 Only). In Part III, enter the partner's distributive share of each item of income, deduction, and credit and any other information the partner needs to prepare the partner's tax return.
Enter the reference ID number used on Form 8865, item F2(b). For details, see the instructions for item F2(b), earlier.
You do not need to complete Form 8865, Schedule L, if you have attached to Form 8865 a copy of the Schedule L from Form 1065 or Form 1065-B filed by the foreign partnership.
The balance sheets should agree with the partnership's books and records. Attach a statement explaining any differences.
Only Category 1 filers are required to complete Form 8865, Schedule L.
If you answered "Yes" to item G9 on page 1 of Form 8865, you do not have to complete Form 8865, Schedule L.
Schedule L requires balance sheets prepared and translated into U.S. dollars in accordance with U.S. generally accepted accounting principles (GAAP).
If the partnership or any qualified business unit of the partnership uses the dollar approximate separate transactions method (DASTM), Form 8865, Schedule L, should reflect the tax balance sheets prepared and translated into U.S. dollars according to Regulations section 1.985-3(d).
All Category 1 filers must complete Form 8865, Schedule M, and it should reflect the book values of the partnership's assets, as described in Temporary Regulations sections 1.861-9T(g)(2) and 1.861-12T. Assets should be characterized as U.S. assets or foreign assets in one or more separate limitation categories as provided in Temporary Regulations sections 1.861-9T(g)(3) and 1.861-12T. The balance sheets should be prepared in U.S. dollars under Temporary Regulations section 1.861-9T(g)(2)(ii).
If the partnership or any qualified business unit of the partnership uses DASTM, Form 8865, Schedule M should reflect the tax balance sheet prepared in U.S. dollars under Regulations section 1.985-3(d). See Temporary Regulations section 1.861-9T(g)(2)(ii)(A)(2) for more information on DASTM.
You do not need to complete Form 8865, Schedule M-1, if you have attached to Form 8865 a copy of the Form 8865, Schedule M-1, from Form 1065 or Form 1065-B filed by the foreign partnership.
Form 8865 filers are not required to complete Schedule M-3 (Form 1065), Net Income (Loss) Reconciliation for Certain Partnerships.
Only Category 1 filers are required to complete Form 8865, Schedule M-1. If you answered "Yes" to item G9 on page 1 of Form 8865, you do not have to complete Form 8865, Schedule M-1.
You do not need to complete Form 8865, Schedule M-2, if you have attached to Form 8865 a copy of the Schedule M-2 from Form 1065 or Form 1065-B filed by the foreign partnership.
Only Category 1 filers are required to complete Form 8865, Schedule M-2. If you answered "Yes" to item G9 on page 1 of Form 8865, you do not have to complete Form 8865, Schedule M-2.
All Category 1 filers must complete Schedule N and report all transactions of the foreign partnership during the tax year of the partnership listed on the top of Form 8865, page 1. A Category 1 filer filing a Form 8865 for other Category 1 filers under the multiple Category 1 filers exception must complete a Schedule N for itself and a separate Schedule N for each Category 1 filer not filing Form 8865.
Category 2 filers are required to complete columns (a), (b), and (c) of Schedule N. Category 2 filers do not have to complete column (d).
Category 3 filers must complete Schedule O.
Part I is used to report the transfer of property to a foreign partnership. Provide the information required in columns (a) through (g) with respect to each contribution of property to the foreign partnership that must be reported. If you contributed property with a FMV greater than its tax basis (appreciated property), or intangible property, provide the information required in columns (a) through (g) separately with respect to each item of property transferred (except to the extent you are allowed to aggregate the property under Regulations sections 1.704-3(e)(2), (3), and (4)). Provide a general description of each item of property in the Supplemental Information Required To Be Reported section. For all other property contributed, aggregate by the categories listed in Part I.
Use Part II to report certain dispositions by a foreign partnership. If you were required to report a transfer of appreciated property to the partnership, and the partnership disposes of the property while you are still a direct or constructive partner, you must report that disposition in Part II. If the partnership disposes of the property in a nonrecognition transaction and receives in exchange substituted basis property, report the subsequent disposition of the substituted basis property in the same manner as provided for the contributed property. See section 7701(a)(42) for the definition of substituted basis property and Regulations section 1.704-3(a)(8) for more information.
Use Schedule P to report the acquisition, disposition, and change of interest in a foreign partnership.
Every Category 4 filer must complete Schedule P.
Part I is completed by Category 4 filers required to report an acquisition of an interest in a foreign partnership. See Categories of Filers, earlier, for more details about which types of acquisitions must be reported.
This section is completed by U.S. persons who are Category 4 filers because they disposed of an interest in a foreign partnership. See Categories of Filers, earlier, for more details about what types of dispositions must be reported. For each disposition reported in Part II, indicate in Part IV whether a statement is required by Regulations section 1.751-1(a)(3) to be filed with respect to the disposition.
This section is completed by U.S. persons who are Category 4 filers because their direct proportional interest in the foreign partnership changed. See Categories of Filers, earlier, for more details about which changes in proportional interest must be reported.
We ask for the information on this form and its schedules to carry out the Internal Revenue laws of the United States. We need this information to ensure that you are complying with the revenue laws and to allow us to figure and collect the right amount of tax. Sections 6038, 6038B, and 6046A require you to provide this information. Section 6109 requires you to provide your identification number. Failure to provide all of the requested information in a timely manner or providing false information may subject you to penalties.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. However, section 6103 allows or requires the Internal Revenue Service to disclose or give such information to the Department of Justice for civil and criminal litigation, and to cities, states, the District of Columbia, and U.S. commonwealths and possessions for use in administering their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism.
The time needed to complete and file this form and related schedule will vary depending on individual circumstances. The estimated burden for individual taxpayers filing this form is approved under OMB control number 1545–0074 and is included in the estimates shown in the instructions for their individual income tax return. The estimated burden for all other taxpayers who file this form is shown below.
|Form||Recordkeeping||Learning about the
law or the form
|Preparing, copying, assembling, and sending the form to the IRS|
|8865||66 hr., 58 min.||23 hr., 11 min.||36 hr., 5 min.|
|Schedule K-1 (Form 8865)||13 hr., 38 min.||41 min.||57 min.|
|Schedule O (Form 8865)||12 hr., 12 min.||2 hr., 22 min.||2 hr., 41 min.|
|Schedule P (Form 8865)||5 hr., 15 min.||35 min.||42 min.|
If you have comments concerning the accuracy of these time estimates or suggestions for making this form and related schedules simpler, we would be happy to hear from you. You can send your comments from www.irs.gov/formspubs/. Click on “More Information” and then on “Give us feedback.” Or you can send your comments to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send Form 8865 to this address. Instead, see When and Where To File, earlier.
|More Online Instructions|