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Department of the Treasury
Internal Revenue Service
Instructions for Form 8986

(December 2021)
Partner’s Share of Adjustment(s) to Partnership-Related Item(s)
(Required Under Sections 6226 and 6227)

Contents Page of adjustments to partnership-related to file a petition under section 6234 or, if a
Reminder . . . . . . . . . . . . . . . . . . . 1 items. petition is filed under section 6234, the
Purpose of Form . . . . . . . . . . . . . . . 1 date when the court’s decision becomes
Definitions . . . . . . . . . . . . . . . . . . . 1 Definitions final or the date the closing agreement is
General Instructions . . . . . . . . . . . . . 1 AAR partnership is a BBA partnership entered into between the IRS and the
Who Should Prepare Form (see below) that has filed an partnership.
8986 . . . . . . . . . . . . . . . . . 1 administrative adjustment request (AAR) First affected year is the partner’s tax
Where To Submit Form under section 6227. year that includes the end of the audited
8986 . . . . . . . . . . . . . . . . . 2 AAR partnership’s adjustment year is partnership’s reviewed year(s). Each
Due Dates . . . . . . . . . . . . . . . . 2 the partnership tax year that includes the reviewed year of an audited partnership
Withholding for Foreign year the AAR was filed with the IRS. should have a corresponding first affected
Partners . . . . . . . . . . . . . . . 2 Affected partner is a partner that held an year for each partner.
Instructions for Partners interest in a pass-through partner at any Imputed underpayment (IU) is the
That Receive Form 8986 . . . . . 2 time during the tax year of the amount determined under sections 6225,
Specific Instructions . . . . . . . . . . . . . 2 pass-through partner to which the 6226, and 6227, and the regulations
Part I—Information About adjustments in the statement relate. thereunder.
the Entity Submitting This Audited partnership, for purposes of Partnership representative (PR) is the
Form . . . . . . . . . . . . . . . . . 3 Form 8986, is a BBA partnership that person designated by the partnership or
Part II—Information About made the election under section 6226 to by the IRS under section 6223 and the
the Audited Partnership have its partners report their share of regulations thereunder to act on behalf of
or the Partnership That adjustments to partnership-related items. the audited partnership.
Filed an AAR . . . . . . . . . . . . 3 Audited partnership’s adjustment year Pass-through partner is a pass-through
Part III—Information About is the year that includes the date the court entity that holds an interest, either directly
the Pass-Through Partner decision became final, if the partnership or indirectly, in a partnership.
Issuing and Submitting petitioned the Tax Court. Otherwise, it is Pass-through entities include
This Form 8986 . . . . . . . . . . 3 the year that includes the date the final partnerships, S corporations, trusts, and
Part IV—Information About partnership adjustment (FPA) letter was decedents’ estates. For purposes of Form
the Partner Receiving 8986, a pass-through entity is not a wholly
This Form 8986 . . . . . . . . . . 3 mailed, or the FPA waiver was executed
Part V—Partner’s Total by the IRS. owned entity disregarded as separate
Reviewed Year Income, BBA AAR is an administrative adjustment from its owner for federal tax purposes.
Gain, Loss, Deductions, request filed by a BBA partnership. Reporting year is the partner’s tax
Credits, and Other Items . . . . . 3 BBA partnership is a partnership that is year(s) that includes the date the audited
Part VI—Statements . . . . . . . . . 5 subject to the centralized partnership audit partnership furnished the Forms 8986 to
Section references are to the Internal Revenue regime that was enacted into law by its partners.
Code unless otherwise noted. section 1101 of the Bipartisan Budget Act Reviewed year is the audited
of 2015. partnership’s tax year to which the
Future Developments Designated individual (DI) is the partnership adjustment(s) relates.
For the latest information about individual through whom an entity Reviewed year adjustments are
developments related to Form 8986 and partnership representative acts. adjustments originating from the
its instructions, such as legislation Extended due date of the AAR partnership’s reviewed year(s).
enacted after they were published, go to partnership’s adjustment year return Reviewed year partner is any person
IRS.gov/Form8986. is, for purposes of Form 8986, the that held an interest in the audited
extended due date of the AAR partnership at any time during the
Reminder partnership’s adjustment year return partnership’s reviewed year.
regardless of whether the partnership is
The Bipartisan Budget Act of 2015 (BBA) required to file a return for the adjustment General Instructions
created a centralized partnership audit year or timely filed a request for an
regime that replaced the partnership audit extension. Who Should Prepare Form 8986
procedures under the Tax Equity and Extended due date of the audited The following persons or entities should
Fiscal Responsibility Act of 1982 partnership’s adjustment year return prepare Form 8986.
(TEFRA). Form 8986 was created for is, for purposes of Form 8986, the • Audited partnerships that have made
partnerships to show each partner’s share extended due date of the audited an election under section 6226.
of adjustments to partnership-related partnership’s adjustment year return • Direct or indirect pass-through partners
items as a result of a BBA audit or BBA regardless of whether the partnership is that receive a Form 8986 related to an
administrative adjustment request (AAR). required to file a return for the adjustment audited partnership if they choose to
year or timely filed a request for an furnish statements to their partners to
Purpose of Form extension. further push out the adjustments.
Form 8986 is used by BBA partnerships to Finally determined. The partnership • Partnerships that file an AAR under
furnish and transmit each partner’s share adjustment(s) become finally determined section 6227 and either elect to push out
upon the later of the expiration of the time the resulting adjustments to their partners

Jan 26, 2022 Cat. No. 69668G

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or have adjustments that do not result in furnish Forms 8986 to their partners and • Figuring and paying an IU and
an IU. submit them to the IRS, along with Form submitting Form 8985 to the IRS, where
• Direct or indirect pass-through partners 8985, by the extended due date of the the adjustments result in an IU to the
that receive a Form 8986 related to an audited partnership’s adjustment year pass-through entity. See Form 8985 and
AAR partnership, if the direct or indirect return (or the extended due date of the its instructions.
pass-through partner chooses to furnish AAR partnership’s adjustment year One of these two options must be
statements to its partners to further push return). This date can be found in Part II, completed by the extended due date of
out adjustments or have adjustments that item F, of the Form 8986 that was the audited partnership’s adjustment year
do not result in an IU. received by the pass-through partner. return (or the extended due date of the
Failure to submit these forms by the due AAR partnership’s adjustment year
Where To Submit Form 8986 date results in the pass-through partner return).
Audited partnerships and being liable for an IU.
If a pass-through partner fails to
pass-through partners of audited part- A pass-through partner can submit ! timely furnish and submit the
nerships. Section 6241(10) gives the IRS corrected Forms 8986, along with Form CAUTION relevant statements, the
authority to require electronic submission 8985, within 60 days of the original due pass-through partner is liable for an IU as
of anything required to be filed or date without IRS permission. If corrected well as any penalties and interest with
submitted under section 6226(a). Audited forms need to be submitted after the respect to the adjustments reflected on
BBA Partnerships and their pass-through 60-day correction period, the audited the Form 8986 received by the
partners are required to submit Forms partnership must contact the IRS for pass-through partner.
8985 and 8986 electronically. From the permission to submit.
BBA website IRS.gov/BBAPartnerships, Other partners. All other partners that
search for “Electronic Submission of Withholding for Foreign receive Form 8986 should report the
Forms by Audited BBA Partnerships and Partners information on Form 8978, Partner’s
their Pass-through Partners” for steps An audited partnership may have Additional Reporting Year Tax, and attach
required to submit electronically. withholding and reporting obligations if it the Form 8978 to the partner’s reporting
AAR partnerships. AAR partnerships furnishes a Form 8986 to a reviewed year year tax return. For more information, see
that are electing to push out adjustments partner that includes an adjustment Form 8978 and its instructions.
to their partners or have adjustments that subject to withholding under chapter 3 These partners may pay in advance to
do not result in an imputed underpayment (Withholding of Tax on Nonresident Aliens stop the running of interest.
must include Form 8985 with their AAR and Foreign Corporations) or chapter 4 • Pay by EFTPS, debit, or credit card, or
along with Forms 8986. The Forms 8985 (Taxes To Enforce Reporting on Certain Direct Pay (Forms 1040 only).
and 8986 must be filed with, and in the Foreign Accounts). In those cases, the • Select Prepayment on BBA AAR/Exam
same manner, as the AAR. audited partnership must pay the amount Push Out as payment type.
of tax required to be withheld under • As applicable, apply payment to the tax
Pass-through partners of an AAR part- chapter 3 or chapter 4 before the due date form that will have the Form 8978 attached
nership. Pass-through partners of an of the audited partnership's adjustment to it.
AAR partnership must submit Form 8985 year return (without regard to extension)
to the IRS by fax at 888-981-6982, with or or the extended due date of the audited
Specific Instructions
without Forms 8986, as applicable. partnership's adjustment year return in the
Due Dates case of a pass-through partner. See Submitting a corrected form due to an
Instructions for Form 1042, Annual incorrect TIN. If submitting a corrected
Audited partnerships. An audited Withholding Tax Return for U.S. Source form due to an incorrect TIN on a
partnership that has made an election Income of Foreign Persons; or Form 8804, previously submitted and accepted
under section 6226 must furnish Forms Annual Return for Partnership Withholding original Form 8986, you will need to
8986 to its partners and submit them to Tax (Section 1446), for deposit submit two corrected forms:
the IRS, along with Form 8985, no later procedures. The audited partnership must 1. A corrected Form 8986 with the
than 60 days after the date on which the also file an applicable withholding tax correct TIN, and
partnership adjustments are finally return, Form 1042 or Form 8804, and the
determined. Failure to furnish and submit associated information returns, Forms 2. A corrected Form 8986 with the
by the due date results in the audited 1042-S, Foreign Person's U.S. Source incorrect TIN and zeros in Part IV sections
partnership being liable for the IU. Income Subject to Withholding; or Forms E through G, and in Part V. Anytime a
An audited partnership can submit 8805, Foreign Partner's Information corrected Form 8986 is submitted, a
corrected Forms 8986, along with Form Statement of Section 1446 Withholding corrected Form 8985 must also be
8985, within 60 days of the original due Tax, for the calendar year (if filing Forms included.
date without IRS permission. If corrected 1042/1042-S) or tax year (if filing Forms Original or corrected. At the top of the
forms need to be submitted after the 8804/8805) that includes the date on form, check the appropriate box to
60-day correction period, the audited which the Form 8986 was furnished. indicate if the form is original or corrected.
partnership must contact the IRS for Instructions for Partners That Tracking number. Enter the outgoing
permission to submit.
Receive Form 8986 tracking number shown on the related
AAR partnerships. An AAR partnership Form 8985 that was completed by an
that either elects to push out the resulting Pass-through partners. In general, a audited BBA partnership or a
adjustments to its partners or has pass-through partner that receives a Form pass-through partner of an audited BBA
adjustments that do not result in an IU 8986 should take into account the partnership. This field should be left blank
must furnish Forms 8986 to all partners adjustments reflected on the form by for all Forms 8986 related to the filing of a
and include them with their AAR, along either: Form 8985 by a BBA partnership that filed
with Form 8985. • Furnishing Forms 8986 to its own an administrative adjustment request
partners and submitting those forms, (AAR) or a pass-though partner (direct or
Pass-through partners. Direct and along with Form 8985, to the IRS or
indirect pass-through partners must

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indirect) of a BBA partnership that filed an city, state, country code, and ZIP code. In reported on Schedule K-1, the change per
AAR. the state field, enter the two-letter audit or AAR (if none, enter zero), and the
abbreviation or the full name of the foreign corrected amounts.
Audit control number. Enter the audit
province. U.S. partnerships leave the
control number that is provided on Part V—Partner’s Total
country code field blank. Foreign
correspondence with the IRS. Reviewed Year Income, Gain,
pass-through partners enter the country
Pass-through partners can locate this
code found at Foreign Country Codes.
number at the top of the Form 8986 they Loss, Deductions, Credits, and
Item B—Enter the pass-through partner’s
received. AAR partnerships, including Other Items
tax identification number.
pass-through partners of an AAR Note. Adjustments that increase a
Item C—Enter the pass-through partner’s
partnership, should leave this field blank. schedule K-1 item as originally reported or
tax year end to which the adjustments
Part I—Information About the relate. as corrected should be shown as positive
Entity Submitting This Form Item D—Enter the name of the entity that amounts; adjustments that decrease
issued the Form 8986 to the pass-through schedule K-1 items should be shown as
Item A—Indicate which entity is issuing partner, if different from the audited negative amounts.
this form by checking one of the boxes. partnership or AAR partnership in Part II. For columns (a)–(c), refer to the relevant
Item B—Check the box that corresponds Item E—Enter the tax identification Schedule K-1 and instructions. See
to the type of return normally filed by the number of the entity that issued the Form special instructions for changes to
entity issuing this form. If “Other,” also 8986 to the pass-through partner, if Schedule K-3. For each item that was
indicate the type of return filed on the line different from the audited partnership or adjusted, enter the following.
provided. AAR partnership in Part II. Column (a), Line number—The
Schedule K-1 line number that was
Part II—Information About the Part IV—Information About the adjusted. If you have changes to
Audited Partnership or the Partner Receiving This Form Schedule K-3, enter “K3” (no dash).
Partnership That Filed an AAR 8986 Column (b), Line title—The title of the
Schedule K-1 item that was adjusted. For
Items A and B—On lines 1–6, enter the Item A—On lines 1–6, enter the partner’s adjustments to Schedule K-3, enter the
name and address of the partnership. The name, address, city, state, country code, part, section (if applicable), line, and
name must be entered exactly as it and ZIP code. In the state field, enter the column reference.
appears on the Form 8985 associated two-letter abbreviation or the full name of Column (c), Code—If applicable, use the
with this Form 8986. For example, if you the foreign province. U.S. partners leave code letters listed in the Schedule K-1
entered XYZ LLC on the Form 8985, you the country code field blank. Foreign instructions that correspond to the line
must enter XYZ LLC on the Form 8986. In partners enter the country code found at number shown in column (a). For
the state field, enter the two-letter Foreign Country Codes. adjustments to Schedule K-3, if
abbreviation or the full name of the foreign Item B—Enter the partner’s tax applicable, enter the country code. See
province. U.S. partnerships leave the identification number. the Schedule K-3 instructions. If no
country code field blank. Foreign Item C—Indicate by checking box 1 or 2 if specific code applies, enter “NA.”
partnerships enter the country code found the partner is a general partner or LLC Column (d), As reported—Enter the
at Foreign Country Codes. member manager, limited partner, or LLC original amount reported to the partner on
Item C—Enter the partnership's tax member. Indicate by checking box 3 or 4 if their Schedule K-1 or as previously
identification number. This number must the partner is a domestic or foreign corrected by the partnership. For
be entered exactly as it appears on the partner. adjustments to Schedule K-3, do not enter
Form 8985 associated with this Form Item D—Indicate if, for tax purposes, the amounts on column (d).
8986. partner is an individual, S corporation, C Column (e), Check if statement in Part
Item D—Enter the tax year end date of the corporation, partnership, or other type of VI—Check the box in this column if the
reviewed year of the partnership. Each entity by checking one of the boxes 1–5. If item shown in column (a) has a
reviewed year should have a separate “Other,” indicate what type on the line corresponding statement in Part VI. For
Form 8986. This form must be completed provided. Also indicate if the partner is a adjustments to Schedule K-3, enter an
for reviewed years that have adjustments retirement plan or other tax-exempt entity. explanation of the adjustment on Part VI of
related to an audit or an AAR. Note: If you entered a social security Form 8986 with reference to the entry on
Item E—Enter the partnership’s number as the partner's tax identification Part V, column (b).
adjustment year ending date. number in box B, you should check box 1.
Item F—Enter the extended due date of You should only select boxes 2–5 when
the partnership’s adjustment year tax you have entered an EIN in box B.
return, regardless of whether the Item E—Enter the partner’s percentage
partnership has filed for an extension. For share of partnership profits, losses, and
AAR partnerships, this will be the capital as originally reported on
extended due date of the tax year the AAR Schedule K-1, the change per audit or
was filed. AAR (if none, enter zero), and the
Item G—Enter the date the partnership corrected percentage.
furnished the Forms 8986 to its partners. Item F—Enter the partner’s share of total
Part III—Information About the liabilities—recourse and nonrecourse—as
originally reported on Schedule K-1, the
Pass-Through Partner Issuing change per audit or AAR (if none, enter
and Submitting This Form 8986 zero), and the corrected amounts.
Item A—On lines 1–6, enter the Item G—Enter the components of the
pass-through partner’s name, address, partner’s capital account as originally

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Example 1
On its filed 2021 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 2021 return, ABC filed an AAR on
November 10, 2022, 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)

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

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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 distributions if the partner received money, Applicable penalties. The applicability
adjustments as finally determined— and as a code C if the partner received of penalties is determined at the audited
Enter the partner’s share of reviewed year property other than money. partnership or AAR partnership level. In
adjustments that corresponds to the line the penalties section of Part V, enter the
Disguised sale adjustments.
item in column (a). For adjustments to penalty code sections, descriptions, rates,
Distributions to a partner that were
Schedule K-3, do not enter amounts on adjustment line numbers, and total
changed as part of an audit proceeding to
column (f). adjustment amount to which the penalty
disguised sale proceeds under section
Column (g), Approved modifications— applies.
707 should be reported with the column
Enter the partner’s share of the total
(a) line number that corresponds to the
modifications approved by the IRS with Part VI—Statements
Schedule K-1 “Other” category and with
respect to the item adjusted. Modifications Column (a), Line no./code—List the
column (c), code DS. The partnership
related to the filing of an AAR should not corresponding Part V column (a)
should also include a statement in Part VI
be shown in this column. For adjustments Schedule K-1 line number and column (c)
describing the asset that was sold, the
to Schedule K-3, do not enter amounts on code (if applicable) for each item for which
proceeds, and the tax basis of the asset at
column (g). a statement is included.
the time of the contribution.
Column (h), Net (column (f) minus Column (b), Statement—Include a
column (g))—Enter the amount in column Note. Column (f) amounts should detailed explanation of the amount(s) that
(f) less the amount in column (g). For correspond to the partner’s distributive correspond to the item in column (a).
adjustments to Schedule K-3, do not enter share of audit adjustments as finally
amounts on column (h). determined (or AAR adjustments). Supporting schedules and statements
Column (g) amounts should only include should be in a format that shows the
Loans and other items recharacterized original amount, the net change, and the
approved modifications with respect to the
as distributions to partners. If a partner receiving the Form 8986. Only correct amount for each item listed in the
reviewed year adjustment has been made approved amended return and closing statement. If any column (b) statements
to change a partner loan or other item to a exceed the space allowable in one box,
agreement modifications should be
partner distribution, this adjustment should continue in the next box with the same
included in column (g) above. All other
be reported with the column (a) line information in column (a).
modifications should be included in a
number that corresponds to the
separate statement in Part VI.
Schedule K-1 “Distributions” category and Statements that need to be sent sepa-
with column (c), code A, for cash rately by fax. Adjustments that cannot be
fully reflected in Part VI can be faxed

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separately to 888-981-6982. All faxed not per qualified trade or business, these include a statement for each trade or
statements to be associated with a Form should only be included once in the first business identifying the adjustment(s) to
8986 should have the following section 199A statement attached to Form qualified items of income, gain, deduction,
information at the top of the statement: 8986, regardless of how many statements and loss and W-2 wages allocable to
“Statement for Form 8986,” Submitting may be necessary. qualified payments.
Entity Name, Submitting Entity TIN, Adjustments that increase or decrease
Partner’s TIN (if related to Form 8986), section 199A information reported to the Note. Because section 199A(g)
Tax Year (should be the same as the year partners must be shown in a separate deductions are reported as a cumulative
in the Form 8986 Part II, section D), and statement for each trade or business or amount and not per qualified trade or
Audit Control Number (if applicable). All each aggregated trade or business. See business, these should only be included
changes should be reported in the below for an example of the information once in the first statement of adjustments
“Description, Line Number, Amount that should be included in Part VI of the to items allocable to qualified payments
Reported, Adjustments, and As Form 8986. attached to Form 8986, regardless of how
Corrected” format. This section can also many statements may be necessary.
be used to report any intervening year Note. Section 199A dividends should Example. Assume Partnership ABC
adjustments that result from related review only be included in the first section 199A has one trade or business that is an SSTB
year adjustments. If reporting intervening statement attached to Form 8986. and is not a patron in a specified
year adjustments be sure to list in the tax Each trade or business should indicate agricultural or horticultural cooperative. On
year, line number, as reported, if it is a PTP, Aggregated, or an SSTB. its filed return, Partnership ABC reported
adjustments, and as corrected format. See the Instructions for Schedule K-1 the items shown in Table 1 on Statement
Statements related to section 199A in- (Form 1065 or Form 1120-S). A—QBI Pass-Through Entity Reporting,
attached to Partner A’s Schedule K-1.
formation. If the partnership is a patron of a
specified agricultural or horticultural
Note. Because section 199A dividends cooperative, the partnership must also
are reported as a cumulative amount and

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

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.

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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

                                              unless the form displays a valid OMB        approved under OMB control number 
Paperwork Reduction Act Notice.       We      control number. Books or records relating   1545-0123 and is included in the 
ask for the information on this form to carry to a form or its instructions must be       estimates shown in the instructions for 
out the Internal Revenue laws of the          retained as long as their contents may      their business income tax return.
United States. You are required to give us    become material in the administration of 
the information. We need it to ensure that    any Internal Revenue law. Generally, tax    If you have comments concerning the 
you are complying with these laws and to      returns and return information are          accuracy of these time estimates or 
allow us to figure and collect the right      confidential, as required by section 6103.  suggestions for making this form simpler, 
amount of tax.                                                                            we would be happy to hear from you. See 
You are not required to provide the                 The time needed to complete and file  the instructions for the tax return with 
information requested on a form that is       this form will vary depending on individual which this form is filed.
subject to the Paperwork Reduction Act        circumstances. The estimated burden for 
                                              business taxpayers filing this form is 

Instructions for Form 8986 (Dec. 2021)                   -7-

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