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Foreign Tax Credits on Schedules K-2 and K-3: Clarifying and Simplifying Reporting Guidelines for Parts I-III

A live 110-minute CPE webinar with interactive Q&A

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Tuesday, January 14, 2025

1:00pm-2:50pm EST, 10:00am-11:50am PST

or call 1-800-926-7926
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This webinar will focus on entering and simplifying the reporting of foreign tax credits on Schedules K-2 and K-3. Our panel of international tax reporting experts will walk you through Parts 1, II, and III of these schedules and provide tips and examples of common and complex foreign tax credit reporting situations.

Description

Schedules K-2 and K-3 are still relatively new. These schedules are also constantly updated, making completing these efficiently and correctly a problem for international tax practitioners. Part I, Partnership's Other Current Year International Information, provides 13 tax boxes to notify recipients of additional tax reporting responsibilities. The parts applicable to foreign tax credit determinations include boxes 1, 4, and 5: gain on personal property sales, foreign tax translation, and high-taxed income. If any box is marked, additional attachments are required, providing the relevant tax reporting details.

Part II, Foreign Tax Credit Limitation, is divided into two sections: gross income and deductions. Since different rules apply for sourcing various types of income, each type is reported separately in Section 1. Complicating the reporting is that sales of personal property must be sourced based on a partner's residence. Country code XX is provided as a choice when the individual partner is required to make this determination.

Part III, Other Information for Preparation of Form 1116 or 1118 provides the information preparers need to allocate and apportion specific expenses. Similar to the complexities of reporting gross income, each expense item, interest and R&E, for example, is subject to different guidelines and must be reported separately.

The reporting requirements for foreign tax credits on Schedules K-2 and K-3 are complicated. Tax practitioners must understand these guidelines so that multinational taxpayers fully benefit from valuable foreign credits.

Listen as our panel of international tax advisers reviews and explains the intricacies of preparing Schedules K-2 and K-3 for global tax practitioners.

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Outline

  1. Reporting foreign tax credits on Schedules K-2 and K-3: introduction
  2. Part I - Partner's Share of Partnership's Other Current Year International Information
  3. Part II - Foreign Tax Credit Limitation
  4. Part III - Other Information for Preparation of Form 1116 or 1118
  5. Domestic entity filing exception
  6. Examples
  7. Other considerations

Benefits

This webinar will cover these and other critical issues:

  • Sourcing income by category for Part I, Schedules K-2 and K-3
  • Allocating and apportioning expenses for foreign tax credits
  • Recommendations for simplifying the completion of Schedules K-2 and K-3
  • When a partner in a partnership eligible for the domestic filing exception should request Schedule K-3
  • Examples of completing Schedules K-2 and K-3 and the related Form 1116

Faculty

Neumeyer, Daniel
Daniel J. Neumeyer, JD, LLM
Tax Manager
CLA (CliftonLarsonAllen LLP)

Mr. Neumeyer focuses his practice on international tax issues. In particular, he helps lead CLA’s delinquent...  |  Read More

Samtoy, John
John Samtoy
Tax Partner
Holthouse Carlin & Van Trigt

Mr. Samtoy’s practice specializes in international tax compliance and consulting services, with a focus on...  |  Read More

Wilhoite, Travis
Travis Wilhoite, CPA
Manager, International Tax Services
CliftonLarsonAllen

Mr. Wilhoite brings a diverse background of experience in both domestic and international tax matters to his practice...  |  Read More

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