In early 2021 the IRS posted updates to the instructions for the new Schedules K-2 and K-3 for partnerships and S corporations that pointed out that most entities with no international activities or foreign equity holders will need to provide information via these Schedules unless they obtain information from each equity holder. The IRS has followed these revisions up with new guidance related to these forms that further modify the filing rules. In this session we'll look at the conditions under which these Schedules must be prepared by partnerships and S corporations, as well as steps that can be taken to obtain information from equity holders that may allow the entities to avoid the preparation of the forms.
Learning Objectives
• Prepare Schedules K-2 and K-3 for partnership and S corporation income tax returns
• Use information from Schedule K-3 included with a partner's K-1 to prepare the individual return
• Recognize situations where the penalty relief for 2021 can be applied, as well as understand penalties the IRS claims it can assert if the form is not properly completed
• List the dates the IRS expects to allow full MeF/XML filing for Schedules K-2 and K-3 for S corporations and Forms 8865
• Advise clients on the use of the option to attach PDFs for all 2021 returns
• Identify partnerships and S corporation data needed by clients to prepare international tax information
• Understand what data must be obtained from partners/shareholders for a partnership or S corporation to potentially not be required to file Schedules K-2 and K-3
Major Topics
• Schedules K-2 and K-3 for partnership and S corporation income tax returns
• Schedule K-3 included with a partner's K-1 to prepare the individual return
• Penalty relief for 2021
• Dates the IRS expects to allow full MeF/XML filing for Schedules K-2 and K-3 for S corporations and Forms 8865
• Options to attach PDFs for all 2021 returns
• Partnerships and S corporation data needed by clients to prepare international tax information
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