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                                                                                                          Department of the Treasury
                                                                                                          Internal Revenue Service
Instructions for Form 8986

(January 2024)
Partner’s Share of Adjustment(s) to Partnership-Related Item(s)
(Required Under Sections 6226 and 6227) For use with Form 8986 (December 2019)

Contents                                                                Page  pass-through partner to which the adjustments in the statement 
Reminder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1 relate.
Purpose of Form . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1 Audited partnership, for purposes of Form 8986, is a BBA 
                                                                              partnership that made the election under section 6226 to have its 
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 partners report their share of adjustments to partnership-related 
General Instructions    . . . . . . . . . . . . . . . . . . . . . . . . .   2 items.
Who Should Prepare Form 8986                    . . . . . . . . . . . . .   2 Audited partnership’s adjustment year is the year that 
                                                                              includes the date the court decision became final, if the 
Where To Submit Form 8986 . . . . . . . . . . . . . . . .                   2 partnership filed a petition under section 6234. Otherwise, it is 
Due Dates       . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2 the year that includes the date the final partnership adjustment 
Withholding for Foreign Partners                . . . . . . . . . . . . .   2 (FPA) letter was mailed, or the FPA waiver was executed by the 
Instructions for Partners That Receive Form                                   IRS.
      8986   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2 Adjustments that do not result in an IU. A partnership 
                                                                              adjustment does not result in an imputed underpayment (IU) if 
Specific Instructions   . . . . . . . . . . . . . . . . . . . . . . . . .   3 the result of netting with respect to any grouping or subgrouping 
Part I—Information About the Entity                                           that includes the particular partnership adjustment is zero or less 
      Submitting This Form          . . . . . . . . . . . . . . . . . . .   3 than zero. Adjustments do not result in an IU if the calculation of 
Part II—Information About the Audited                                         the IU on those adjustments results in an amount that is zero or 
      Partnership or the Partnership That Filed                               less than zero. Any adjustment to an item which is not a 
                                                                              monetary item (for example, an election made by the 
      an AAR    . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3 partnership) is an adjustment that does not result in an IU.
Part III—Information About the Pass-Through                                   BBA AAR is an administrative adjustment request filed by a BBA 
      Partner Issuing and Submitting This Form                                partnership.
      8986   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3 BBA partnership is a partnership that is subject to the 
Part IV—Information About the Partner                                         centralized partnership audit regime that was enacted into law by 
      Receiving This Form 8986 . . . . . . . . . . . . . . . .              3 section 1101 of the Bipartisan Budget Act of 2015 (BBA). The 
                                                                              BBA is generally effective for tax years beginning on or after 
Part V—Partner’s Total Reviewed Year                                          January 1, 2018.
      Income, Gain, Loss, Deductions, Credits,                                Designated individual (DI) is the individual through whom an 
      and Other Items       . . . . . . . . . . . . . . . . . . . . . . .   4 entity partnership representative acts.
Part VI—Statements . . . . . . . . . . . . . . . . . . . . . .              6 Extended due date of the partnership’s adjustment year 
Section references are to the Internal Revenue Code unless                    return is, for purposes of Form 8986, the extended due date of 
otherwise noted.                                                              the AAR or audited partnership’s adjustment year return 
                                                                              regardless of whether the partnership is required to file a return 
Future Developments                                                           for the adjustment year or timely filed a request for an extension.
For the latest information about developments related to Form                 Finally determined. The partnership adjustment(s) becomes 
8986 and its instructions, such as legislation enacted after they             finally determined upon the later of the expiration of the time to 
were published, go to IRS.gov/Form8986.                                       file a petition under section 6234 or, if a petition is filed under 
                                                                              section 6234, the date when the court’s decision becomes final 
Reminder                                                                      or the date the closing agreement is entered into between the 
The Bipartisan Budget Act of 2015 (BBA) created a centralized                 IRS and the partnership.
partnership audit regime that replaced the partnership audit                  First affected year is the partner’s tax year that includes the 
procedures under the Tax Equity and Fiscal Responsibility Act of              end of the audited or AAR partnership’s reviewed year(s). Each 
1982 (TEFRA). Form 8986 was created for partnerships to show                  reviewed year of an audited partnership should have a 
each partner’s share of adjustments to partnership-related items              corresponding first affected year for each partner.
as a result of a BBA audit or BBA administrative adjustment                   Imputed underpayment (IU) is the amount determined under 
request (AAR).                                                                sections 6225, 6226, and 6227, and the regulations thereunder.
                                                                              Partnership representative (PR) is the person designated by 
Purpose of Form                                                               the partnership or by the IRS under section 6223 and the 
                                                                              regulations thereunder to act on behalf of the BBA partnership.
Form 8986 is used by BBA partnerships to furnish and transmit                 Pass-through partner is a pass-through entity that holds an 
each partner’s share of adjustments to partnership-related items.             interest, either directly or indirectly, in a partnership. 
                                                                              Pass-through entities include partnerships, S corporations, 
Definitions                                                                   trusts, and decedents’ estates. For purposes of Form 8986, a 
AAR partnership is a BBA partnership (see below) that has                     pass-through entity is not a wholly owned entity disregarded as 
filed an administrative adjustment request (AAR) under section                separate from its owner for federal tax purposes or a trust that is 
6227.                                                                         wholly owned by only one person.
AAR partnership’s adjustment year is the partnership tax year                 Pass-through partner’s tax year end to which the 
that includes the year the AAR was filed with the IRS.                        adjustments relate is the end of the pass-through partner's tax 
Affected partner is a partner that held an interest in a                      year which includes the audited or AAR partnership's reviewed 
pass-through partner at any time during the tax year of the                   year end date.

Jan 16, 2024                                                            Cat. No. 69668G

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Note. Certain entity partners can be both a non-pass-through An audited partnership can submit corrected Forms 8986,
partner and a pass-through partner. To the extent the along with Form 8985, within 60 days of the original due date
adjustments an entity partner received on a Form 8986 relate to without IRS permission. If corrected forms need to be submitted
items that are taxable at the entity level, it is considered a after the 60-day correction period, the audited partnership must
non-pass-through partner, and with regard to adjustments that contact the IRS for permission to submit.
pass through to its owners/beneficiaries it is considered a
AAR partnerships. An AAR partnership that either elects to
pass-through partner.
push out the resulting adjustments to its partners or has
Reporting year is the partner’s tax year(s) that includes the date
adjustments that do not result in an IU must furnish Forms 8986
the audited or AAR partnership furnished the Forms 8986 to its
to all partners and include them with their AAR, along with Form
partners.
8985.
Reviewed year is the audited or AAR partnership’s tax year to
which the partnership adjustment(s) relates. Pass-through partners. Direct and indirect pass-through
Reviewed year adjustments are adjustments originating from partners must furnish Forms 8986 to their partners and submit
the AAR or audited partnership’s reviewed year(s). them to the IRS, along with Form 8985, by the extended due
Reviewed year partner is any person that held an interest in date of the audited partnership’s adjustment year return (or the
the audited or AAR partnership at any time during the extended due date of the AAR partnership’s adjustment year
partnership’s reviewed year. return). This date can be found in Part II, item F, of the Form 8986
that was received by the pass-through partner. Failure to submit
General Instructions these forms by the due date results in the pass-through partner
being liable for an IU.
Who Should Prepare Form 8986 A pass-through partner who receives a Form 8986 related to
The following persons or entities should prepare Form 8986. an audited partnership can submit corrected Forms 8986, along
• Audited partnerships that have made an election under with Form 8985, within 60 days of the original due date without
section 6226. IRS permission. If corrected forms need to be submitted after the
• Direct or indirect pass-through partners that receive a Form 60-day correction period, the pass-through partner must contact
8986 related to an audited partnership if they choose to furnish the IRS for permission to submit.
statements to their partners to further push out the adjustments.
Direct or indirect pass-through partners that receive a Form 8986 Withholding for Foreign Partners
related to an AAR partnership, if the direct or indirect An audited partnership may have withholding and reporting
pass-through partner chooses to furnish statements to its obligations if it furnishes a Form 8986 to a reviewed year partner
partners to further push out adjustments or have adjustments that includes an adjustment subject to withholding under
that do not result in an IU. chapter 3 (Withholding of Tax on Nonresident Aliens and Foreign
• Partnerships that file an AAR under section 6227 and either Corporations) or chapter 4 (Taxes To Enforce Reporting on
elect to push out the resulting adjustments to their partners or Certain Foreign Accounts). In those cases, the audited
have adjustments that do not result in an IU. partnership must pay the amount of tax required to be withheld
under chapter 3 or chapter 4 before the due date of the audited
Where To Submit Form 8986 partnership's adjustment year return (without regard to
Audited partnerships and pass-through partners of audi- extension) or the extended due date of the audited partnership's
ted partnerships. Section 6241(10) gives the IRS authority to adjustment year return in the case of a pass-through partner.
require electronic submission of anything required to be filed or See Instructions for Form 1042, Annual Withholding Tax Return
submitted under section 6226(a). Audited BBA Partnerships and for U.S. Source Income of Foreign Persons; or Form 8804,
their pass-through partners are required to submit Forms 8985, Annual Return for Partnership Withholding Tax (Section 1446),
Pass-Through Statement—Transmittal/Partnership Tracking for deposit procedures. The audited partnership must also file an
Report, and 8986 electronically. See IRS.gov/BBAeSubmit for applicable withholding tax return, Form 1042 or Form 8804, and
steps required to register and submit electronically. the associated information returns, Forms 1042-S, Foreign
Person's U.S. Source Income Subject to Withholding; or Forms
AAR partnerships. AAR partnerships that are electing to push 8805, Foreign Partner's Information Statement of Section 1446
out adjustments to their partners or have adjustments that do not Withholding Tax, for the calendar year (if filing Forms
result in an imputed underpayment must include Form 8985 with 1042/1042-S) or tax year (if filing Forms 8804/8805) that
their AAR along with Forms 8986. The Forms 8985 and 8986 includes the date on which the Form 8986 was furnished.
must be filed with, and in the same manner as, the AAR.
Pass-through partners of an AAR partnership. Pass-through Instructions for Partners That Receive Form
partners of an AAR partnership must submit Form 8985 to the 8986
IRS by fax at 888-981-6982, with or without Forms 8986, as
applicable. This fax number is not for general use. Taxpayers Pass-through partners. In general, a pass-through partner that
should not use this for anything besides Forms 8985 and 8986. receives a Form 8986 should take into account the adjustments
Illegible or other submissions received via this fax number will reflected on the form by either:
not be processed. See IRS.gov/BBAAAR for additional • Furnishing Forms 8986 to its own partners and submitting
information. those forms, along with Form 8985, to the IRS or
• Figuring and paying an IU and submitting Form 8985 to the
IRS, where the adjustments result in an IU to the pass-through
Due Dates
entity. See Form 8985 and its instructions.
Audited partnerships. An audited partnership that has made One of these two options must be completed by the extended
an election under section 6226 must furnish Forms 8986 to its due date of the audited partnership’s adjustment year return (or
partners and submit them to the IRS, along with Form 8985, no the extended due date of the AAR partnership’s adjustment year
later than 60 days after the date on which the partnership return).
adjustments are finally determined. Failure to furnish and submit
by the due date may result in the audited partnership being liable
for the IU.

2 Instructions for Form 8986 (January 2024)

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If a pass-through partner fails to timely furnish and if you entered XYZ LLC on the Form 8985, you must enter XYZ
! submit the relevant statements, the pass-through partner LLC on the Form 8986. In the state field, enter the two-letter
CAUTION may be liable for an IU as well as any penalties and abbreviation or the full name of the foreign province. U.S.
interest with respect to the adjustments reflected on the Form partnerships leave the country code field blank. Foreign
8986 received by the pass-through partner. partnerships enter the country code found at Foreign Country
Codes.
Other partners. All other partners that receive Form 8986 Item C—Enter the partnership's tax identification number. This
should report the information on Form 8978, Partner’s Additional number must be entered exactly as it appears on the Form 8985
Reporting Year Tax, and attach the Form 8978 to the partner’s associated with this Form 8986.
reporting year tax return. For more information, see Form 8978 Item D—Enter the tax year end date of the reviewed year of the
and its instructions. partnership. Each reviewed year should have a separate Form
These partners may pay in advance to stop the running of 8986. This form must be completed for reviewed years that have
interest. adjustments related to an audit or an AAR.
• Pay by EFTPS, debit or credit card, or Direct Pay (Forms 1040 Item E—Enter the partnership’s adjustment year ending date.
only). Item F—Enter the extended due date of the partnership’s
• Select Prepayment on BBA AAR/Exam Push Out as payment adjustment year tax return, regardless of whether the partnership
type. has filed for an extension. For AAR partnerships, this will be the
• As applicable, apply payment to the tax form that will have the extended due date of the tax year the AAR was filed.
Form 8978 attached to it. Item G—Enter the date the partnership furnished the Forms
8986 to its partners.
Special Instructions for certain entity partners. Certain
entity partners (such as trusts and estates) that receive a Form Part III—Information About the Pass-Through
8986 may have some adjustments that are taxable at the entity
level, and other adjustments that pass through to the owners and Partner Issuing and Submitting This Form 8986
beneficiaries of the entity partner. The adjustments taxable to the Item A—On lines 1–6, enter the pass-through partner’s name,
entity partner should be reported on the Form 8978 attached to address, city, state, country code, and ZIP code. In the state
the entity partner’s reporting year tax return. For all other field, enter the two-letter abbreviation or the full name of the
adjustments that flow through to its owners or beneficiaries, the foreign province. U.S. partnerships leave the country code field
entity partner should follow the above instructions for blank. Foreign pass-through partners enter the country code
“pass-through partners.” found at Foreign Country Codes.
Item B—Enter the pass-through partner’s tax identification
Specific Instructions number.
Item C—Enter the pass-through partner’s tax year end to which
Submitting a corrected form due to an incorrect TIN. If the adjustments relate.
submitting a corrected form due to an incorrect TIN on a Item D—Enter the name of the entity that issued the Form 8986
previously submitted and accepted original Form 8986, you will to the pass-through partner, if different from the audited
need to submit two corrected forms: partnership or AAR partnership in Part II.
1. A corrected Form 8986 with the correct TIN, and Item E—Enter the tax identification number of the entity that
2. A corrected Form 8986 with the incorrect TIN and zeros in issued the Form 8986 to the pass-through partner, if different
Part IV, sections E through G, and in Part V. Anytime a corrected from the audited partnership or AAR partnership in Part II.
Form 8986 is submitted, a corrected Form 8985 must also be
included. Part IV—Information About the Partner
Receiving This Form 8986
Original or corrected. At the top of the form, check the Item A—On lines 1–6, enter the partner’s name, address, city,
appropriate box to indicate if the form is original or corrected. state, country code, and ZIP code. In the state field, enter the
Tracking number. Enter the outgoing tracking number shown two-letter abbreviation or the full name of the foreign province.
on the related Form 8985 of a BBA partnership or a pass through U.S. partners leave the country code field blank. Foreign
partner of a BBA partnership. partners enter the country code found at Foreign Country Codes.
Item B—Enter the partner’s tax identification number.
Audit control number. Enter the audit control number that is Item C—Indicate by checking box 1 or 2 if the partner is a
provided on correspondence with the IRS. Pass-through general partner or LLC member manager, limited partner, or LLC
partners can locate this number at the top of the Form 8986 they member. Indicate by checking box 3 or 4 if the partner is a
received. AAR partnerships, including pass-through partners of domestic or foreign partner.
an AAR partnership, should leave this field blank. Item D—Indicate if, for tax purposes, the partner is an individual,
S corporation, C corporation, partnership, or other type of entity
Part I—Information About the Entity Submitting by checking one of the boxes 1–5. If “Other,” indicate what type
This Form on the line provided. Also indicate if the partner is a retirement
Item A—Indicate which entity is issuing this form by checking plan or other tax-exempt entity. Note: If you entered a social
one of the boxes. security number as the partner's tax identification number in box
Item B—Check the box that corresponds to the type of return B, you should check box 1. You should only select boxes 2–5
normally filed by the entity issuing this form. If “Other,” also when you have entered an EIN in box B.
indicate the type of return filed on the line provided. Item E—Enter the partner’s percentage share of partnership
profits, losses, and capital as originally reported on
Part II—Information About the Audited Schedule K-1, the change per audit or AAR (if none, enter zero),
Partnership or the Partnership That Filed an and the corrected percentage.
Item F—Enter the partner’s share of total liabilities—recourse
AAR and nonrecourse—as originally reported on Schedule K-1, the
Items A and B—On lines 1–6, enter the name and address of change per audit or AAR (if none, enter zero), and the corrected
the partnership. The name must be entered exactly as it appears amounts.
on the Form 8985 associated with this Form 8986. For example,

Instructions for Form 8986 (January 2024) 3

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Item G—Enter the components of the partner’s capital account Schedule K-3. For each item that was adjusted, enter the
as originally reported on Schedule K-1, the change per audit or following.
AAR (if none, enter zero), and the corrected amounts. Column (a), Line number—The Schedule K-1 line number that
was adjusted. If you have changes to Schedule K-3, enter “K3”
Note. If the partner in the partnership is an entity, such as (no dash).
single-member limited liability company (LLC), that is a Column (b), Line title—The title of the Schedule K-1 item that
disregarded entity (DE) for federal income tax purposes, in item was adjusted. For adjustments to Schedule K-3, enter the part,
A, enter the name and address of the beneficial owner of the DE section (if applicable), line, and column reference.
partner. The beneficial owner is the taxpayer who owns the DE Column (c), Code—If applicable, use the code letters listed in
partner. Enter the TIN of the beneficial owner of the DE partner in the Schedule K-1 instructions that correspond to the line number
item B rather than the TIN of the DE partner. In addition to the shown in column (a). For adjustments to Schedule K-3, if
beneficial owner information reported in Part IV, list the name applicable, enter the country code. See the Schedule K-3
and TIN of the DE partner in Part VI of the Form 8986. instructions. If no specific code applies, enter “NA.”
Column (d), As reported—Enter the original amount reported
Part V—Partner’s Total Reviewed Year Income, to the partner on their Schedule K-1 or as previously corrected
Gain, Loss, Deductions, Credits, and Other by the partnership. For adjustments to Schedule K-3, do not
Items enter amounts on column (d).
Column (e), Check if statement in Part VI—Check the box in
Note. Adjustments that increase a schedule K-1 item as this column if the item shown in column (a) has a corresponding
originally reported or as corrected should be shown as positive statement in Part VI. For adjustments to Schedule K-3, enter an
amounts; adjustments that decrease schedule K-1 items should explanation of the adjustment on Part VI of Form 8986 with
be shown as negative amounts. reference to the entry on Part V, column (b).
For columns (a)–(c), refer to the relevant Schedule K-1 and
instructions. See special instructions for changes to

Example 1
On its filed 2024 return, partnership ABC reported $1,000 of general category foreign source interest income with respect to
Country Y on Partner A’s Schedule K-3. Partnership ABC later determined that the amount should have been reported as passive
category foreign source interest income on Schedule K-3. To make the correction to the 2024 return, ABC filed an AAR on
November 10, 2025, attaching Forms 8985 and 8986. The two-letter code from the list at Foreign Country Codes for Country Y is
YY. Partnership ABC includes in Part V of the Form 8986 sent to Partner A the information as follows.

Example 1. Form 8986, Part V. Partner’s Total Reviewed Year Income, Gain, Loss, Deduction, Credits, and
Other Items
Schedule K-1
(a) (b) (c) (d) (e) (f)
Line number Line title Code* As reported Check if statement Reviewed year
in Part VI adjustments as
finally determined
K-3 Part II, Sec. 1, Line 6A, YY
column (e)
K-3 Part II, Sec. 1, Line 6A, YY
column (c)

Partnership ABC includes in Part VI of the Form 8986 sent to Partner A the information as follows.

Example 1. Form 8986, Part VI. Statements
(a) (b)
Line no./ Statement
code
Line title Code As reported Review year adjustments As corrected
K-3 Part II, Sec. 1, Line 6A, YY $1,000 $(1,000) $0
column (e)
Part II, Sec. 1, Line 6A, YY $0 $1,000 $1,000
column (c)

4 Instructions for Form 8986 (January 2024)

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Example 2
On its filed return, Partnership ABC reported on Partner A’s Schedule K-3, Part VIII, as follows.

Example 2. Schedule K-3 (Form 1065), Part VIII.
Line Entry
A 1234
B PAS
C iii
Unit Euro QBU1
1a1i YY
1a1ii 1000

Subsequent to filing its return, Partnership ABC determines that the amount reported on Line 1a1ii of Partner A’s Schedule K-3, Part
VIII, should have been €1,500. Partnership ABC makes the correction by filing an AAR with Forms 8985 and 8986 attached. It
includes the following information in Part V of the Form 8986.

Example 2. Form 8986, Part V. Partner’s Total Reviewed Year Income, Gain, Loss, Deduction, Credits, and
Other Items
Schedule K-1
(a) (b) (c) (d) (e) (f)
Line number Line title Code* As reported Check If statement Reviewed year
in Part VI adjustments as
finally determined
K-3 Part VIII, Line 1a1 YY

Partnership ABC must report the adjustment amount with respect to Partner A in Part VI of Form 8986 as follows.

Example 2. Form 8986, Part VI. Statements
(a) (b)
Line number/code Statement
Part VIII, K-3 Line As reported Adjustments As corrected
K-3 A 1234
B PAS
C iii
1a1ii 1,000 500 1,500

Note. Although the first three lines are not adjusted, they are necessary to identify the adjustment line, because there might be more
than one Part VIII.

Column (f), Reviewed year adjustments as finally should not be shown in this column. For adjustments to
determined—Enter the partner’s share of reviewed year Schedule K-3, do not enter amounts on column (g).
adjustments that corresponds to the line item in column (a). For Column (h), Net (column (f) minus column (g))—Enter the
adjustments to Schedule K-3, do not enter amounts on column amount in column (f) less the amount in column (g). For
(f). adjustments to Schedule K-3, do not enter amounts on column
Column (g), Approved modifications—Enter the partner’s (h).
share of the total modifications approved by the IRS with respect
Loans and other items recharacterized as distributions to
to the item adjusted. Modifications related to the filing of an AAR partners. If a reviewed year adjustment has been made to
change a partner loan or other item to a partner distribution, this

Instructions for Form 8986 (January 2024) 5

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adjustment should be reported with the column (a) line number statements section can be used to add an “As Corrected”
that corresponds to the Schedule K-1 “Distributions” category column to the amounts reported in Part V. If doing so be sure to
and with column (c), code A, for cash distributions if the partner complete the line number field in column (a) which is a
received money, and as a code C if the partner received property mandatory field for all items entered in Part VI (Statements).
other than money.
Statements related to section 199A information.
Disguised sale adjustments. Distributions to a partner that
were changed as part of an audit proceeding to disguised sale Note. Because section 199A dividends are reported as a
proceeds under section 707 should be reported with the column cumulative amount and not per qualified trade or business, these
(a) line number that corresponds to the Schedule K-1 “Other” should only be included once in the first section 199A statement
category and with column (c), code DS. The partnership should attached to Form 8986, regardless of how many statements may
also include a statement in Part VI describing the asset that was be necessary.
sold, the proceeds, and the tax basis of the asset at the time of Adjustments that increase or decrease section 199A
the contribution. information reported to the partners must be shown in a separate
Note. Column (f) amounts should correspond to the partner’s statement for each trade or business or each aggregated trade
distributive share of audit adjustments as finally determined (or or business. See below for an example of the information that
AAR adjustments). Column (g) amounts should only include should be included in Part VI of the Form 8986.
approved modifications with respect to the partner receiving the
Form 8986. Only approved amended return and closing Note. Section 199A dividends should only be included in the
agreement modifications should be included in column (g) first section 199A statement attached to Form 8986.
above. All other modifications should be included in a separate Each trade or business should indicate if it is a PTP, an
statement in Part VI. Aggregated, or an SSTB. See the Instructions for Schedule K-1
(Form 1065 or Form 1120-S).
Applicable penalties. The applicability of penalties is
determined at the audited partnership or AAR partnership level. If the partnership is a patron of a specified agricultural or
In the penalties section of Part V, enter the penalty code horticultural cooperative, the partnership must also include a
sections, descriptions, rates, adjustment line numbers, and total statement for each trade or business identifying the
adjustment amount to which the penalty applies. adjustment(s) to qualified items of income, gain, deduction, and
loss and W-2 wages allocable to qualified payments.
Part VI—Statements
Note. Because section 199A(g) deductions are reported as a
Column (a), Line no./code—List the corresponding Part V cumulative amount and not per qualified trade or business, these
column (a) Schedule K-1 line number and column (c) code (if should only be included once in the first statement of
applicable) for each item for which a statement is included. adjustments to items allocable to qualified payments attached to
Column (b), Statement—Include a detailed explanation of the Form 8986, regardless of how many statements may be
amount(s) that correspond to the item in column (a). necessary.
Supporting schedules and statements should be in a format Example. Assume Partnership ABC has one trade or
that shows the original amount, the net change, and the correct business that is an SSTB and is not a patron in a specified
amount for each item listed in the statement. If any column (b) agricultural or horticultural cooperative. On its filed return,
statements exceed the space allowable in one box, continue in Partnership ABC reported the items shown in Table 1 on
the next box with the same information in column (a). Statement A—QBI Pass-Through Entity Reporting, attached to
Statements provided in addition to amounts in Part V. To Partner A’s Schedule K-1.
further explain the effect of any adjustment, the Part VI

Table 1. Example of Section 199A Related Amounts Reported to Partner A on Statement A—QBI
Pass-Through Entity Reporting

EIN: PTP
Aggregated
■ SSTB
Partner A’s share of:
QBI or qualified PTP items subject to partner-specific determinations:
Ordinary business income (loss) $200,000
Rental income (loss) $10,000
Royalty income (loss)
Section 1231 gain (loss) $50,000
Other deductions $80,000
W-2 wages $50,000
UBIA of qualified property $60,000
Section 199A dividends $5,000

6 Instructions for Form 8986 (January 2024)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Assume the adjustments per audit increased Partner A’s share of ordinary income by $10,000 and royalty income by $5,000, and 
decreased other deductions by $20,000. Assume that all of the adjustments are determined to be qualified items of income, gain, 
deduction, and loss at the partnership level. 

Partnership ABC should include in Part VI of the Form 8986 sent to Partner A the information shown in Table 2.

Table 2. Example of Part VI of Form 8986

EIN:                                         As Reported                   Net Adjustments           As Corrected
Partner’s Share:                              PTP                                                     PTP
                                              Aggregated                                              Aggregated
                                             ■ SSTB                                                  ■ SSTB
QBI or qualified PTP items subject to 
partner-specific determinations:
          Ordinary business income (loss)                  $200,000                        $10,000                       $210,000
                       Rental income (loss)                        $10,000                                               $10,000
                       Royalty income (loss)                                               $5,000                        $5,000
                 Section 1231 gain (loss)                          $50,000                                               $50,000
                           Other deductions                        $80,000                 ($20,000)                     $60,000
W-2 wages                                                          $50,000                                               $50,000
UBIA of qualified property                                         $60,000                                               $60,000
Section 199A dividends                                             $5,000                                                $5,000

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information are confidential, as required by section 6103.

Instructions for Form 8986 (January 2024)                                                                                           7

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