Q:Do Thomson Reuters GoSystem and ONESOURCE products generate IRS Schedules K-2 and K-3?
A:Yes, the tax software generates Schedules K-2 and K-3 for 1065, 1120S, and Form 8865, as applicable.
Q: Can I e-file 1065 Schedules K-2 and K-3?
A: Yes. For e-files, the IRS accepts Schedule K-2 and K-3 only in XML format for tax years 2022, 2023, 2024 and all future tax years. You cannot e-file the information in a PDF file.
Delete the e-file information for tax year 2021 chart.
Q:Is the IRS still making changes to the instructions and issuing guidance on Schedules K-2 and K-3?
A:Yes. The IRS continues to issue revisions and guidance on irs.gov if you need it. In the 1065 software, you can find links to some of this IRS information on Organizer > Foreign Information > Ptr Distributive Share- International > K-2, K3 Activation and General Info.
Q:Is country code OC allowed on the 1065 Schedules K-2 and K-3?
A:No. The IRS does not allow country code OC on the 1065 Schedules K-2 and K-3. In the software, this is noted on Organizer > Foreign Information > Ptr Distributive Share-International > K-2, K3 Activation and General Info.
Q:Is country code US allowed on the 1065 Schedules K-2 and K-3?
A:Country code US is allowed on the 1065 Schedules K-2 and K-3 for Part II, Section 1 and Part VIII. In the software, this is noted on Organizer > Foreign Information > Ptr Distributive Share-International > K-2,K3 Activation and General Info.
Q:Can the Schedule K-3 IRS Instructions be printed with each Schedule K-3?
A:Yes. The Schedule K-3 Instructions can be printed with each Schedule K-3 when the option is selected on Organizer > General Information > Return and Print Options > Sch K, K-1 and Activity Schedules (bottom of Organizer screen). The IRS instruction will print for the taxpayer copy of the tax return.
Q:Is Schedule K-3 included in the K-1 Package?
A:Yes. Schedule K-3 is included in the K-1 Package.
Q:Where is Schedule K-3, Part XIII on Schedule K-2?
A:Part XIII applies only to Schedule K-3. Therefore, Schedule K-2 does not have a Part XIII.
Q:Are Parts I-XI the same on Schedules K-3 as on Schedule K-2?
A:Each Section of Parts I through XI are generally identical for Schedules K-2 and K-3. An example of a difference is that Schedule K-2 has the partnership amounts and Schedule K-3 has the partner amounts. Another example of a difference is that Part V of Schedule K-2 has a Worksheet 3 and Schedule K-3 has a respective Worksheet 4 instead of Worksheet 3. A third example of a difference is that 1) Part I, Box 6 whitepaper detail and 2) Worksheet A automatically print, as applicable, with Schedule K-3 but to print them with Schedule K-2 (as not required by the IRS), the print options must be selected on Organizer > Ptr Distributive Share-International > Print and Compute Options (bottom of Organizer screen).
Q: What does the 1065 Partner Import and Special Allocations Import do?
The Partner Import transfers partner data into the tax return. The Special Allocations Import transfers special allocations into the tax return. They can both be used for exporting this data.
Both import into Organizer:
For Federal, Partner Import transfers data into
Organizer > Partner Information
.The Special Allocations Import transfers data into
Organizer > Partner Information > Allocations > Special Allocations
.note
The Partner and Special Allocations Import(s) can be used for both Schedules K-1 and K-3. Schedule K-3 (for example, Page 1) uses the same partner’s name and address information as Schedule K-1 uses. When allocating to Schedule K-3, the ratios used (for example, default ratios) are the same as those used on Schedule K-1, if not specially allocated for the item.
Q: I have entered data on the Organizer screens under Organizer > Foreign Information > Ptr Distributive Share-International and fully computed the return so why do I not see amounts on Schedule K- 3?
Common reasons for this:
Verify amounts are entered on the Organizer.
Fully compute the return to verify a full compute occurred and that partner allocations foot to 1.0000.
On Organizer > Partner Allocations (Disabled or Enabled), verify both the Enable partner allocations and the Enable Schedule K-3 partner if NOT using Direct K-1 Import for Schedule K-3 is checked. If not, then check and fully compute.
Verify special allocations are correct.
Verify partner data (and Schedule K-3) are not suppressed.
Q: What is CAUTION text used for on the Schedules K-2 and K-3 Organizer screens?
A: CAUTION texts, are important to follow especially on the
K-2,K3 Activation and General Info
and thePrint and Compute Options
Organizers. If you don't follow these on-screen instructions it can cause severe issues.Q: What is the Notes text used for on the Schedules K-2 and K-3 Organizer, Tax Form, and Workpaper screens?
A: Read
Notes
texts to avoid issues and to understand the tax software and IRS limitations better. They will save you time and reduce the need to call Support for assistance.Q: On applicable fields, there is text indicating the IRS does not use the field in the XML e-file schema. Will this data display in the XML e-file?
A: The IRS hasn't provided a field for this data in the XML e-file, so the fields will not be in the XML output. This data is included in the print file.
Q: I have previously seen links in the Schedules K-2 and K-3 area for important information. Where are these links located in the tax software?
A: These links are located on the
K-2,K3 Activation and General Info
Organizer in thePtr Distributive Share- International
folder. Some of these links will take you to external sources outside the control of Thomson Reuters so use caution when using them. At the bottom of this same Organizer screen is additional important information for Schedules K-2 and K-3.Q: What does the number of occurrences displayed at the bottom of some Schedules K-2 and K-3 screens mean?
A: The IRS XML e-file schemas provide maximum limitations on the number of occurrences for some items. Where the number of occurrences do not exceed several hundred allowed in the IRS XML e-file schema, the tax software displays the number of occurrences (after a full compute) already used for the item along with the maximum number of occurrences allowed by the IRS for the item. Do not exceed the maximum occurrences allowed by the IRS if XML e-filing.
Q: Why is the total on Schedule K-2, Part X, Section 2, line 24 incorrect?
A: This happens when an import is bad and data for other losses or items gets stuck on Part X, Section 2. Go to
Organizer > Foreign Information > Ptr Distributive Share-International > Print and Compute Options
. Read the CAUTION text near the bottom of the Organizer screen and do what it says. Enter a description if needed and compute the return completely. Go to the related Organizer node and you should see the freed data.