The Internal Revenue Service has provided details on relief for domestic partnerships and S corporations in preparing the new schedule K-2 and K-3s. Those eligible for relief will not have to file those schedules for tax year 2021, the agency noted this week.The requirements are detailed in the new frequently asked questions (about Schedules K-2 and K-3.
Qualifying organizations cannot have direct partners that are foreign partnerships, foreign corporations, foreign individuals, foreign estates or foreign trusts. They also must not have foreign activity, including foreign taxes paid or accrued or ownership of assets that generate, have generated or may reasonably expected to generate foreign source income
In addition, in tax year 2020, the entities, partners and shareholders, cannot have provided to requested information about Line 16, Form 1065, Schedules K and K-1 (line 14 for Form 1120-S), and Line 20c, Form 1065, Schedules K and K-1 (Controlled Foreign Corporations, Passive Foreign Investment Companies, 1120-F, section 250, section 864(c)(8), section 721(c) partnerships, and section 7874) (line 17d for Form 1120-S).
