New K2/K3 Forms required for Partnerships and S-corporations? Stay tuned…
2/15/22: IRS Update: Coming relief from certain Schedule K-2 and K-3 reporting: The IRS intends to provide certain additional transition relief for this year from the Schedule K-2 and K-3 reporting for certain domestic partnerships and S corporations with no foreign activities, foreign partners or shareholders, and without knowledge of partner or shareholder need for information on items of international relevance. For 2021, these qualifying domestic partnerships and S corporations will not have to file the new schedules. We are taking this step in response to feedback we received from the tax community and our stakeholders. The IRS will provide full details of this relief soon.
2/14/22: There are new forms related to international reporting, which initially would appear to only apply to businesses with international activities. However, the IRS changed the instructions on January 18, 2022 to require these forms with the entity tax return if any underlying shareholder or partner is required to file Form 1116 or 1118. Schedules K2 and K3 are lengthy (19 and 20 pages for partnerships and 14 and 15 pages for S-corps, respectively).
We are awaiting software programming related to these changes, and will be in touch with clients with additional questions or information to proceed appropriately. This is likely to cause filing delays. Please contact us if you have questions.