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Complex Issues With Schedule K-2 and K-3 Reporting: Tiered Partnerships, GILTI HTE, FDII

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, February 29, 2024

Recorded event now available

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This webinar will go beyond the basics of reporting foreign transactions on the new Schedules K-2 and K-3. Our panel of international tax experts will cover how to report complex foreign transactions on these schedules, including the global intangible low-taxed income (GILTI) high-tax exclusion (HTE), Section 250 deduction for foreign-derived intangible income (FDII), tiered partnerships, and other complicated foreign transactions, properly for tax practitioners working with multinational taxpayers.

Description

Now that practitioners have handled the initial reporting of the new Schedules K-2 and K-3, questions have arisen as to how to properly report the most complex aspects of the new forms. Although the requirements to report these complexities have always been in place, it is probable that in years past, these requirements were not fully met on the attached notes included by practitioners.

Aside from the necessary burden of including voluminous information to simply report foreign taxes withheld on interest and dividends, lower-tiered partnerships must report information to upper-tiered partnerships. Deduction eligible income (DEI), qualified business asset investment (QBAI), FDII, and GILTI must be reported in the recently added Section of Part IV of Schedule K-2.

Failure to properly report the required information can trigger penalties of up to $10,000 per entity. Fortunately, the IRS has anticipated the difficulties of the new reporting requirements and has provided transition relief for oversights meeting specific guidelines. International tax practitioners need to thoroughly understand the complex reporting requirements of these recently added schedules.

Listen as our panel of international tax reporting experts walks you through reporting examples of foreign reporting requirements on Schedules K-2 and K-3.

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Outline

  1. Complex K-2 and K-3 reporting
  2. Reporting challenges
    1. PFIC information for qualified electing funds
    2. Dual-consolidated losses
    3. FDII
    4. GILTI and GILTI high-tax exclusion
    5. Tiered partnerships
    6. Section 863(b) sales and treaty sourcing
    7. Other
  3. Other reporting matters
    1. Interaction with BBA
    2. Electronic filing requirements
    3. Other

Benefits

The panel will cover these and other critical issues:

  • Reporting the GILTI HTE on Schedule K-2
  • Tiered partnership reporting on new Schedule K-3 and K-2
  • How the Section 250 FDII deduction is reported on Schedule K-2
  • Simplifying reporting of foreign tax withholding on interest and dividends

Faculty

D'Amore, Elizabeth
Elizabeth D’Amore, JD, LLM
Director
CLA Cranston

Ms. D'Amore is an International Tax Manager.

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Kalungi, Ronald
Ronald Kalungi, JD, LLM
Tax Counsel
Northrop Grumman

Mr. Kalungi provides tax planning, tax compliance and business consulting services to a broad base of clients including...  |  Read More

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