K-3 Exception Verbiage to Print on K-1

[dascpa]

In December the IRS changed the instructions for both 1065 and 1120S re domestic filing exception (for the K-2 and K-3).  All four criteria must be met.  Item #3 says if criteria 1 and 2 are satisfied, partners receive notification from the partnership at the latest when the partnership furnishes the K-1 to the partner.  The notice can be provided as an attachment to the K-1....  Question - has anyone seen accepted verbiage to write on the K-1?

[JRC]

Yes.

I found that NATP has a notice suggestion to include with the K1's I found on there website. 

There is a timeline which also needs to be met.

[msmith7305]

How do you access this? I looked on the website and could not locate it.

[dascpa]

I accessed it.  Saw their suggestion and then modified it to my needs.

Per IRS instructions, this entity qualifies for an exception to filing Forms K-2 (entity) and K-3 (member) [change title as it applies].  If the member would like a K-3 they must request it to the managing member or the CPA by 02/15/2023 (one-month prior to the due date of filing the tax return).

This entire thing sucks.  How many returns will be done after 02/15 and before 03/15 or after 08/15 and prior to 09/15?  I have no desire to print thousands of wasted pages for no information.  Nor do I want 20 page K-1's.  I'm already attaching a million notes and now basis schedules, QBI schedules, etc.  Every K-1 is a book.

[JRC]

Search TAX CON 2022.

There is a ZIP file you will need to down load.

Not sure if for Members only though.

[msmith7305]

Thanks

[rbynaker]

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@dascpa wrote:

I accessed it.  Saw their suggestion and then modified it to my needs.

Per IRS instructions, this entity qualifies for an exception to filing Forms K-2 (entity) and K-3 (member) [change title as it applies].  If the member would like a K-3 they must request it to the managing member or the CPA by 02/15/2023 (one-month prior to the due date of filing the tax return).

This entire thing sucks.  How many returns will be done after 02/15 and before 03/15 or after 08/15 and prior to 09/15?  I have no desire to print thousands of wasted pages for no information.  Nor do I want 20 page K-1's.  I'm already attaching a million notes and now basis schedules, QBI schedules, etc.  Every K-1 is a book.

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1) That's wildly incorrect.  Read the instructions starting at the bottom of page 3.  Read all of the requirements and then all of the examples (yay, tax homework!):

https://www.irs.gov/pub/irs-pdf/i1065s23.pdf

2) Either get out of the entity tax prep business (my choice) or double your tax prep fee for PTEs.

Only the government could come up with something so convoluted.  The 1-month date is determined retroactively when you file the return (but is no later than 8/15/23).  What this means is that you have 30 days from receiving the first K-3 request to efile the return WITHOUT including K-2/K-3 info in the filing copy (assuming all other conditions are met).  You ARE still required to furnish the information but ONLY to the requesting partner(s) within 30 days of receiving the request (non-requesting partners don't get it--unless/until they request it--and IRS doesn't get it.)  Presumably this will trigger a K-2/K-3 filing requirement for the 2023 PTE return (filed in 2024) but who knows what those instructions might say.

Are we having fun yet?

Rick