IR-2021-215, November 3, 2021 WASHINGTON — The Internal Revenue Service today posted detailed reporting directions for certain passthrough entities and taxpayers reporting of partnership interests held in connection with the performance of services, often referred to as "carried interests," in the form of frequently asked questions (FAQs). The FAQs contain sample worksheets that certain passthrough entities and taxpayers may be required to use in reporting "carried interests," partnership interests held in connection with the performance of services for tax returns, filed after December 31, 2021 in which a passthrough entity applies the final regulations. In addition, the FAQs contain additional instructions for certain passthrough entities and taxpayers who though not required to file the sample worksheets must provide similar information and must disclose whether the information was determined under the proposed regulations or another method for tax returns filed after December 31, 2021 for a taxable year beginning before January 19, 2021. A 2017 tax law change recharacterized certain net long-term capital gains of a partnership that holds one or more applicable partnership interest (APIs) as short-term capital gains. The provision generally requires that a capital asset be held for more than three years for capital gains allocated with respect to any API to be treated as a long-term capital gain. The purpose of the FAQs is to provide guidance relating to both Passthrough Entity filing and reporting requirements and Owner Taxpayer filing requirements in accordance with Department of the Treasury regulations revised in TD 9945PDF. This updated reporting guidance will also be added to the next revision of Publication 541, PartnershipsPDF, which will be released in 2022.