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New 2018 Schedule K-1 Items for Partnership Returns: Meeting Complex Compliance Issues

Expanded Partnership Liability Share Reporting, Additional Basis Identification Requirements, New Foreign Info Reporting

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

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Conducted on Wednesday, June 26, 2019

Recorded event now available

This course will provide partnership advisers and compliance professionals with a practical guide to the challenges of preparing a Schedule K-1 beyond basic reporting of income and loss carried through from Form 1065, with a specific focus on new line items added as part of the 2017 tax reform law. The panel will discuss reporting separately stated items, pro rata shares of partnership liabilities, basis adjustments, at-risk and passive loss limitations, as well as the 199A and foreign income and asset disclosures required on partners' K-1s.

Description

Proper completion of a client's federal Schedule K-1s to report a partner's share of a partnership's income, gains, losses, etc. has long presented challenges to tax advisers, particularly for specialized investment partnerships such as fund of funds or master limited partnerships. Changes to the Schedule K-1 beginning with the 2018 tax year may create additional complexity for partnerships and their tax advisers.

The K-1 for the tax year 2018 introduces several substantive changes to prior years' reporting requirements. The updated Schedule requires taxpayers to disclose the recipient partner's beginning share of partnership liabilities, as opposed to only the ending amount, which will help in tracking a partner's basis. Additionally, partnerships will need to report negative tax basis capital interests for partnerships not using tax basis to calculate capital account balances. The IRS issued guidance offering penalty relief for taxpayers omitting this reconciliation under specified circumstances.

The most substantial changes to the K-1 involve the new foreign information and repatriation provision created by the 2017 tax reform law. Partnerships must report each partner's share of the entity's foreign inclusion amounts under Section 951 GILTI, Section 965(a) transition tax, and Subpart F income other than GILTI or 965 transition items.

The new form adds further codes in Box 16 for foreign transactions while eliminating or replacing some Code items in Box 13 other deductions. These changes will create additional disclosure and schedule requirements for partnerships with foreign holdings, or non-tax basis capital account reporting. Tax advisers will need to factor in these new items in completing K-1s for impacted partners.

Listen as our expert panel provides a practical guide to completing Schedule K-1, with a focus on the new reporting items presented in the 2018 form.

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Outline

  1. Review of Schedule K-1 data, including footnote information
    1. Partner information
    2. Basis schedule, capital accounts, and passive activity losses
    3. Partner's share of current-year income and other items
    4. Ownership percentages
  2. New partnership liability share calculations
  3. Additional basis reporting rules
  4. New foreign information requirements

Benefits

The panel will cover these and other relevant topics:

  • Making correct decisions about shares of income, loss, gain and credit on a K-1
  • Understanding the importance of classification and allocation of partnership liabilities on a Schedule K-1, and how the 2018 form requires additional liability share tracking
  • The changes to partnership capital account and negative basis reporting on Schedule K-1 beginning in 2018
  • New foreign information reporting requirements

Faculty

Kuntz, Amie
Amie Kuntz, CPA
Corporate Tax Manager
Sammons Financial Group

Ms. Kuntz has 13 years of diverse experience working in both private and public accounting including corporations,...  |  Read More

Orr, Thomas
Thomas A. Orr, CPA
Senior Manager
BDO USA

Mr. Orr has over nine years of experience in public accounting with both regional and national firms. His experience is...  |  Read More