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                                                                                                       Department of the Treasury
                                                                                                       Internal Revenue Service
2023

Partner’s Instructions for 

Schedule K-1 (Form 1065)

Partner's Share of Income, Deductions, Credits, etc.
(For Partner's Use Only)

Contents                                                              Page Box 13. Other deductions.   Code W, Other deductions, 
General Instructions  . . . . . . . . . . . . . . . . . . . . . . . . . 2  previously included a number of bulleted items. These 
Specific Instructions . . . . . . . . . . . . . . . . . . . . . . . .   12 items have been assigned individual codes. See Box 13. 
Part I. Information About the Partnership . . . . . . . . . .           12 Other Deductions, later, for the expanded list of codes.
Part II. Information About the Partner        . . . . . . . . . . . .   12 Box 15. Credits. Code P, Other credits, previously 
Part III. Partner's Share of Items . . . . . . . . . . . . . . . .      14 included a number of bulleted items. These items have 
Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15 been assigned individual codes. See Box 15. Credits, 
Box 11. Other Income (Loss)         . . . . . . . . . . . . . . . . .   17 later, for the expanded list of codes and codes for new 
Box 12. Section 179 Deduction         . . . . . . . . . . . . . . . .   19 energy credits.
Box 13. Other Deductions . . . . . . . . . . . . . . . . . . . .        19 Box 19. Distributions. For 2023, partners receiving 
Box 14. Self-Employment Earnings (Loss)               . . . . . . . .   22 distributions of property from a partnership in a liquidating 
                                                                           or non-liquidating distribution under certain circumstances 
Box 15. Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
                                                                           must attach a statement to their tax return. See Box 19. 
Box 16. International Transactions        . . . . . . . . . . . . . .   24 Distributions, later.
Box 17. Alternative Minimum Tax (AMT) Items                 . . . . .   25
                                                                           Box 20. Other information.  Code AH, Other 
Box 18. Tax-Exempt Income and Nondeductible 
                                                                           information, previously included a number of bulleted 
Expenses      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
                                                                           items. These items have been assigned individual codes. 
Box 19. Distributions . . . . . . . . . . . . . . . . . . . . . . . .   25 See Box 20. Other Information, later, for the expanded list 
Box 20. Other Information     . . . . . . . . . . . . . . . . . . . .   26 of codes.
List of Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
                                                                           Box 20, code P. The instructions have been updated 
Section references are to the Internal Revenue Code 
                                                                           relating to section 453A information required to be 
unless otherwise noted.
                                                                           provided by the partnership.
Future Developments                                                        Box 20, code X.  Disclosure of payment obligations 
                                                                           including guarantees and deficit obligations (DROs).
For the latest information about developments related to 
Schedule K-1 (Form 1065) and the Partner's Instructions                    Reminders
for Schedule K-1 (Form 1065), such as legislation enacted                  Domestic partnerships treated as aggregates for pur-
after they were published, go to IRS.gov/Form1065.                         poses of sections 951, 951A, and 956(a). Final 
                                                                           regulations announced in T.D. 9960 treat domestic 
What’s New                                                                 partnerships as aggregates of their partners for purposes 
                                                                           of sections 951, 951A, and 956(a), and any provision that 
Partner’s basis.  The Worksheet for Adjusting the Basis 
                                                                           specifically applies by reference to any of those sections, 
of a Partner’s Interest in the Partnership has been 
                                                                           for tax years of foreign corporations beginning on or after 
changed to provide more details. Specific instructions are 
                                                                           January 25, 2022, and for tax years of U.S. persons in 
also included.
                                                                           which or with which such tax years of foreign corporations 
Item J. The checkbox under item J has been expanded                        end. Domestic partnerships may apply the final 
to include a Sale checkbox and an Exchange checkbox.                       regulations to tax years of foreign corporations beginning 
The instructions outline what is considered a sale and an                  after December 31, 2017, and to tax years of the domestic 
exchange; see Item J, later, for more information.                         partnership in which or with which such tax years of the 
Item K. Item K was expanded to 3 sections: K1, K2, and                     foreign corporations end, provided certain consistency 
K3. Item K3 is a new checkbox to indicate whether the                      requirements are met.
listed liabilities are subject to guarantees or other payment              Line 16. International transactions notice require-
obligations. See Item K3, later.                                           ment.   If box 16 isn't checked, you should receive 
Box 11. Other income (loss).          Code I, Other income                 notification from the partnership that you won't be 
(loss), previously included a number of bulleted items.                    receiving a Schedule K-3 unless you request one.
These items have been assigned individual codes. See                       Individual retirement account (IRA) partners.       The 
Box 11. Other Income (Loss), later, for the expanded list of               partnership has entered the identifying number of the IRA 
codes.                                                                     custodian in item E. The partnership has entered the 

Jan 18, 2024                                                        Cat. No. 11396N

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identifying number of the IRA itself in box 20, code AR, if Decedent’s Schedule K-1
there is unrelated business taxable income reported in
box 20, code V. The IRA partner uses this information in If you're the executor of an estate and you have received a
filing Form 990-T, Exempt Organization Business Income decedent's Schedule K-1, then you have the responsibility
Tax Return. to notify the partnership of the name and taxpayer
identification number (TIN) of the decedent's estate if the
partnership interest is part of the decedent's estate. If a
General Instructions decedent died in a prior year and the partnership
continues to send the decedent a Schedule K-1 after
Purpose of Schedule K-1 being notified of the decedent's death, then you should
The partnership uses Schedule K-1 to report your share of request that the partnership send a corrected
the partnership's income, deductions, credits, etc. Keep it Schedule K-1. If you receive an interest in a partnership by
for your records. Don’t file it with your tax return unless reason of a former partner's death, you must provide the
you're specifically required to do so. (See Code O under partnership with your name and TIN. For treatment of
Box 15, later.) The partnership files a copy of partnership income upon the death of a partner, see Pub.
Schedule K-1 (Form 1065) with the IRS. 559, Survivors, Executors, and Administrators.
For your protection, Schedule K-1 may show only the
Sale or Exchange of Partnership
last four digits of your identifying number (social security
number (SSN), etc.). However, the partnership has Interest
reported your complete identifying number to the IRS. Generally, a partner who sells or exchanges a partnership
Although the partnership generally isn't subject to interest in a section 751(a) exchange must notify the
income tax, you may be liable for tax on your share of the partnership, in writing, within 30 days of the exchange (or,
partnership income, whether or not distributed. Include if earlier, by January 15 of the calendar year following the
your share on your tax return if a return is required. Use calendar year in which the exchange occurred). A section
these instructions to help you report the items shown on 751(a) exchange is any sale or exchange of a partnership
Schedule K-1 on your tax return. interest in which any money or other property received by
the partner in exchange for that partner's interest is
The amount of loss and deduction you may claim on attributable to unrealized receivables (as defined in
your tax return may be less than the amount reported on section 751(c)) or inventory items (as defined in section
Schedule K-1. It's the partner's responsibility to consider 751(d)).
and apply any applicable limitations. See Limitations on
Losses, Deductions, and Credits, later, for more The written notice to the partnership must include the
information. names and addresses of both parties to the exchange, the
identifying numbers of the transferor and (if known) of the
Inconsistent Treatment of Items transferee, and the exchange date.
If you're a partner in a partnership that hasn't elected out
of the centralized partnership audit regime enacted by the An exception to this rule is made for sales or exchanges
Bipartisan Budget Act of 2015 (BBA), you must report the of publicly traded partnership interests for which a broker
items shown on your Schedule K-1 (and any attached is required to file Form 1099-B, Proceeds From Broker and
statements) the same way that the partnership treated the Barter Exchange Transactions.
items on its return.
If a partner is required to notify the partnership of a
If the treatment on your original or amended return is section 751(a) exchange but fails to do so, the partner will
inconsistent with the partnership's treatment, or if the be subject to a penalty for each such failure. However, no
partnership was required to but hasn't filed a return, you penalty will be imposed if the partner can show that the
must file Form 8082, Notice of Inconsistent Treatment or failure was due to reasonable cause and not willful
Administrative Adjustment Request (AAR), with your neglect. See Form 8308, Report of a Sale or Exchange of
original or amended return to identify and explain any Certain Partnership Interests, and its instructions, for
inconsistency (or to note that a partnership return hasn't additional information.
been filed).
Gain or loss from the disposition of your
If you're required to file Form 8082 but don't do so, you TIP partnership interest may be net investment
may be subject to the accuracy-related penalty. This income (NII) under section 1411 and could be
penalty is in addition to any tax that results from making subject to the net investment income tax (NIIT). See Form
your amount or treatment of the item consistent with that 8960, Net Investment Income Tax—Individuals, Estates,
shown on the partnership's return. Any deficiency that and Trusts, and its instructions for information about how
results from making the amounts consistent may be to report and figure the tax due.
assessed immediately.
Three-year holding period requirement for
Errors ! applicable partnership interests. Section 1061
If you believe the partnership has made an error on your CAUTION increases the required long-term capital gains
Schedule K-1, notify the partnership and ask for a holding period for an applicable partnership interest from
corrected Schedule K-1. Don't change any items on your more than 1 year to more than 3 years. The holding period
copy of Schedule K-1. Be sure that the partnership sends applies only to applicable partnership interests held in
a copy of the corrected Schedule K-1 to the IRS. connection with the performance of services as defined in

2 Partner's Inst. for Sch. K-1 (Form 1065) (2023)

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section 1061. See section 1061 and Pub. 541, that section). For details, see the instructions for code J in
Partnerships, for details. box 13.
• Section 108(b)(5) (election related to reduction of tax
Nominee Reporting attributes due to exclusion from gross income of discharge
Any person who holds, directly or indirectly, an interest in of indebtedness).
a partnership as a nominee for another person must • Section 263A(d) (preproductive expenses). See the
furnish a written statement to the partnership by the last instructions for code P in box 13.
day of the month following the end of the partnership's tax • Section 617 (deduction and recapture of certain mining
year. This statement must include the name, address, and exploration expenditures).
identifying number of the nominee and such other person; • Section 901 (foreign tax credit). See Schedule K-3.

description of the partnership interest held as nominee for Additional Information
that person; and other information required by Temporary
To get forms and publications, see the instructions for your
Regulations section 1.6031(c)-1T. A nominee that fails to
tax return or go to IRS.gov.
furnish this statement must furnish to the person for whom
the nominee holds the partnership interest a copy of Limitations on Losses, Deductions,
Schedule K-1 and related information within 30 days of
receiving it from the partnership. and Credits
There are potential limitations on partnership losses that
A nominee who fails to furnish all the information you can deduct on your return. These limitations and the
required by Temporary Regulations section 1.6031(c)-1T order in which you must apply them are as follows: the
when due, or who furnishes incorrect information, is basis limitations, the at-risk limitations, and the passive
subject to a $310 penalty for each failure. The maximum activity limitations. These limitations are discussed below.
penalty is $3,783,000 for all such failures during a
calendar year. If the nominee intentionally disregards the Other limitations may apply to specific deductions (for
requirement to report correct information, each $310 example, the section 179 expense deduction). Generally,
penalty increases to $630 or, if greater, 10% of the specific limitations apply before the at-risk and passive
aggregate amount of items required to be reported, and loss limitations.
there is no limit to the amount of the penalty.
Basis Limitations
Definitions Generally, partners may only claim their share of a
partnership loss (including a capital loss) to the extent it
General Partner
doesn’t exceed their adjusted basis in the partnership at
A general partner is a partner who is personally liable for the end of the partnership’s tax year. Any losses and
partnership debts. deductions not allowed can be carried forward.

Limited Partner It’s the partner’s responsibility to track and maintain the
A limited partner is a partner in a partnership formed information necessary to figure their adjusted basis in the
under a state limited partnership law, whose personal partnership (also known as outside basis). Regulations
liability for partnership debts is limited to the amount of section 1.705–1(a)(1) requires partners to determine the
money or other property that the partner contributed or is adjusted basis in their partnership interest as necessary to
required to contribute to the partnership. Some members determine their tax liability. For example, a determination
of other entities, such as domestic or foreign business is required when a partner sells or exchanges all or part of
trusts or limited liability companies (LLCs) that are their partnership interest or when a partner’s entire
classified as partnerships, may be treated as limited partnership interest is liquidated. In general, a partner’s
partners for certain purposes. adjusted basis is determined under the principles of
subchapter K, including sections 705, 722, 733, and 742.
However, whether a partner qualifies as a limited
partner for purposes of self-employment tax depends on Although the partnership provides an analysis of the
whether the partner meets the definition of a limited partner’s capital account on item L of Schedule K-1, that
partner under section 1402(a)(13). information is based on the partnership’s books and
records and can’t be used to figure the partner’s adjusted
Nonrecourse Loans basis.
Nonrecourse loans are those liabilities of the partnership
for which no partner or related person bears the economic Use the Worksheet for Adjusting the Basis of a
risk of loss. Partner’s Interest in the Partnership to figure the basis of
your interest in the partnership.
Elections
Generally, the partnership decides how to figure taxable For partnership tax years beginning after 2017, a
income from its operations. However, certain elections are partner's share of the adjusted basis in partnership
made by you separately on your income tax return and not charitable contributions (defined in section 170(c)) and
by the partnership. These elections are made under the taxes, described in section 901, paid or accrued to foreign
following code sections. countries and to U.S. territories is subject to this basis
• Section 59(e) (deduction of certain qualified limitation (defined in section 704(d)).
expenditures ratably over the period of time specified in

Partner's Inst. for Sch. K-1 (Form 1065) (2023) 3

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Partnership Basis Worksheet Specific and that gain increases basis. Don’t include gain from the
Instructions transfer of liabilities.
There may be some transactions or certain distributions Line 6. Enter the amount by which your cumulative
that require you to determine the adjusted basis of your depletion deduction (other than oil and gas depletion)
partnership interest at the point in time of the transaction exceeds your proportionate share of basis in the property
or distribution rather than in the order and amounts subject to depletion.
specified in these instructions. Line 7. Add lines 1, 2, 3e, 4o, 5, and 6.
Section B—Decreases
Part I—Partner Basis
Line 8a. Enter the cash and marketable securities
Line 1. Enter your adjusted basis at the beginning of the distributed to you by the partnership as reported in box 19,
partnership’s tax year. This will equal your adjusted basis code A, of Schedule K-1.
at the end of the prior year. Basis can’t be less than zero.
Line 8b. Enter the property distributed subject to
Section A—Increases
recognition of precontribution gain under section 737 as
Line 2. Enter the purchase price of any partnership reported in box 19, code B, of Schedule K-1. Don’t include
interests acquired during the year, plus the amount of the amount of property distributions included in your
money or cash equivalents contributed to the partnership taxable income.
and the adjusted basis of property contributed to the
Line 8c. Enter the partnership’s adjusted basis in the
partnership less any liabilities associated with the
property distributed or, if less, your remaining outside
property. If liabilities associated with the property are
basis assigned to the property. See Pub. 541.
greater than your adjusted basis in the property, then
include the excess liabilities as liabilities assumed by the Line 8d. Add lines 8a, 8b, and 8c.
partnership on line 9b. Include the fair market value (FMV) Line 9a. If the sum of lines 3c and 3d is negative, enter
of any partnership interests received in exchange for the amount here; otherwise, enter zero.
services provided to the partnership. Don’t include the
FMV of services performed in exchange for guaranteed Line 9b. Enter the amount of your individual liabilities that
payments. the partnership assumed during the tax year.
Line 3a. Enter the total ending liabilities from your Line 9c. Add lines 9a and 9b.
Schedule K-1, item K1. Line 10. Add lines 8d and 9c.
Line 3b. Enter the total beginning liabilities from your Line 11a. Add lines 7 and 10. If the amount is negative,
Schedule K-1, item K1. enter zero on line 11a and enter the amount as a positive
Line 3c. Subtract line 3b from line 3a. number on line 11b.
Line 3d. Enter the amount of partnership liabilities you Line 11b. See the instructions for line 11a. The amount
assumed during the tax year. See Regulations section reported on this line represents a taxable gain on
1.752-1(d). distributions in excess of basis. Report the gain on your
tax return.
Line 3e. Add lines 3c and 3d. If the sum is negative, enter
the amount on line 9a. If the sum is zero or positive, enter
the amount on line 3e. Part II—Allowable Loss and Deduction Items

Line 4. Enter on lines 4a through 4n all separately figured A partner's distributive share of partnership losses and
and non-separately figured items of income from deduction items in a given tax year are only allowed to the
Schedule K-1. See below for special line item instructions. extent of the partner’s adjusted basis in their partnership
interest following the adjustments described in Part I.
Note. Enter only positive amounts from Schedule K-1 on When basis is insufficient, and there is more than one
line 4. Negative amounts (decreases to basis) are entered category of loss or deduction items (for example,
on lines 8 through 10. short-term capital loss and long-term capital loss) that
Line 4d. Reduce interest income reported on this line by reduces basis, the amount of each category of loss or
any amount included in interest income with respect to the deduction item that's disallowed is determined on a pro
credit to holders of clean renewable energy bonds. rata basis.

Line 4n. Enter the business interest expense (BIE) A partner's loss and deduction items in excess of basis
reported in box 20, code N, of Schedule K-1, or the are suspended and carried forward for use in the next tax
amount by which BIE reduced positive ordinary income year in which the partner has adjusted basis in their
amounts in box 1, 2, or 3 of Schedule K-1, if less. partnership interest available. See Regulations section
Line 4o. Enter the sum of the amounts on lines 4a 1.704-1(d).

through 4n. Part II shows the pro rata allocation for each category of
Line 5. Enter any gain recognized on contributions of loss or deduction that's suspended and tracks this
property during the year. For example, a contribution to a information. Enter numbers as negative amounts.
partnership which would be treated as an investment
company if it were incorporated would be subject to gain

4 Partner's Inst. for Sch. K-1 (Form 1065) (2023)

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Note. Positive amounts (increases to basis) are entered     Line 15q, column A. Enter BIE reported in box 20, code 
on line 4.                                                  N, of Schedule K-1.
Column A.                                                   Note that BIE is a separate loss class under 
Line 12.   Enter as a negative amount any nondeductible     Regulations section 1.163(j)-6(h)(1). To the extent basis is 
expenses reported in box 18 of Schedule K-1.                proportionately allocated to this loss class (consisting of 
Line 13.   Enter as a negative amount the current year      lines 15n and 15q), interest expense is absorbed by 
deduction for depletion of any partnership oil and gas      applying currently deductible BIE (line 15q) to basis first. 
property, not to exceed your allocable share of the         Once line 15q has been fully absorbed by basis, any 
adjusted basis of the property.                             remaining basis proportionately allocated to the BIE class 
                                                            is then absorbed by applying it to EBIE on line 15n. EBIE 
Column B. 
                                                            is only applicable to partnerships subject to section 163(j). 
Line 12.   Enter any prior-year loss or deduction items     BIE is a separate loss class whether or not the taxpayer is 
that were suspended due to basis limitations and carried    subject to the section 163(j) limitation. See Regulations 
forward to the current tax year.                            sections 1.704-1(d)(2) and 1.163(j)-6(h)(1). If any of the 
Line 13.   Enter any prior-year loss or deduction items     suspended loss consists of BIE, EBIE, or negative section 
that were suspended due to basis limitations and carried    163(j) expense carryover (which will be reflected as EBIE 
forward to the current tax year.                            carryforward on line 15n, columns B (prior year) and D 
Column C.                                                   (current year disallowed carryforward)), see the 
Line 12.   Enter the sum of line 12, columns A and B.       Instructions for Form 8990, Limitation on Business Interest 
Line 13.   Enter the sum of line 13, columns A and B.       Expense Under Section 163(j), regarding the allocation of 
                                                            these three items.
Column D. 
Line 12.   If the sum of lines 12 and 13, column C,         Lines 15, column B. Enter any prior-year loss and 
doesn’t exceed the amount on line 11a, then enter the       deduction items suspended due to basis limitations that 
amount of line 12, column C, in the corresponding line of   were carried forward to the current tax year.
column D. If the sum of lines 12 and 13, column C,          Lines 15, column C. Add each line, column A and 
exceeds the amount of basis remaining on line 11a, then     column B, and enter the amount in the corresponding line 
you must allocate the remaining basis proportionately in    of column C.
column D between lines 12 and 13, column C.
                                                            Lines 15, column D. If Part II, line 14, is zero, skip 
Line 13.   If the sum of lines 12 and 13, column C,         column D. If basis, as reported on Part II, line 14, is greater 
doesn’t exceed the amount on line 11a, then enter the       than line 15s, column C, enter the amount for each line in 
amount of line 13, column C. If the sum of lines 12 and 13, column C in column D. If basis as reported on Part II, 
column C, exceeds the amount of basis remaining on          line 14, is less than line 15s, column C, enter the pro rata 
line 11a, then you must allocate the remaining basis        amount on the corresponding line in column D. The total 
proportionately in column D between lines 12 and 13,        allocation amount reported in line 15s, column D, can’t 
column C.                                                   exceed the amount report on Part II, line 14.
Column E. 
Line 12.   If the sum of lines 12 and 13, column C,         Note. This represents the amount of loss or deduction 
exceeds the amount of basis remaining on line 11a,          items you’re allowed to report on your return from the 
subtract line 12, column D, from line 12, column C, and     partnership this tax year, as limited by your basis. This 
enter the result in column E.                               amount may not match the amount reported on your 
                                                            current year Schedule K-1.
Line 13.   If the sum of lines 12 and 13, column C, 
exceeds the amount of basis remaining on line 11a,          Lines 15, column E. For each line, subtract column D 
subtract line 13, column D, from line 13, column C, and     from column C and enter the amount in column E.
enter the result in column E.                               Line 16. Enter the amount from line 15s, column D.
Line 14. Reduce line 11a by the amounts on lines 12 and     Line 17. If you had unutilized EBIE and disposed of a 
13, column D, and enter on line 14.                         portion or all of your partnership interest, enter the 
Lines 15, column A. Enter the loss and deduction            increase in basis on line 17. See Regulations section 
amounts for each item as reported on your Schedule K-1.     1.163(j)-6(h)(3).
See below for special line item instructions.               Line 18. Add lines 14, 16, and 17. This amount 
Line 15a, column A. Exclude BIE that was included in        represents your basis in your partnership interest at the 
reporting losses in box 1, 2, or 3 of Schedule K-1. BIE is  end of the year.
included as a separate loss class on line 15r.              Basis adjustments computed in different manner 
Line 15i, column A. Include your share of the               than specified in these instructions. 
partnership's section 179 expense deduction for the year    Section 961(a) adjusted basis increases.     Your 
even if you can’t deduct all of it due to limitations.      adjusted basis may be increased under section 961(a) for 
                                                            amounts that you’re required to include in income with 
Line 15n, column A. Enter excess business interest          respect to a controlled foreign corporation (CFC) under 
expense (EBIE).                                             sections 951(a) (for example, subpart F income) and 951A 
                                                            (global intangible low-taxed income (GILTI)) because 

Partner's Inst. for Sch. K-1 (Form 1065) (2023)                                                                          5

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you’re a U.S. shareholder of the CFC and you own (within   corporation that begins on or after January 25, 2022. See 
the meaning of section 958(a)(2)) stock of the CFC         the Partner’s Instructions for Schedule K-3 for more 
through the partnership.                                   information on sections 951(a) and 951A inclusions.
  For purposes of section 951(a), if the partnership is a  Section 961(b)(1) adjusted basis decreases.                   Your 
domestic partnership, then you’ll be treated as owning     adjusted basis may be decreased under section 961(b)(1) 
(within the meaning of section 958(a)) stock of a CFC      by the sum of (a) the dollar basis in previously taxed 
through the partnership (a) for a tax year of the foreign  earnings and profits (PTEP) in your annual PTEP 
corporation that begins before January 25, 2022, only if   accounts that you exclude from your gross income under 
the partnership applies Regulations section 1.958-1(d)(1)  section 959(a) by reason of a distribution made to the 
to treat it as not owning stock of the foreign corporation partnership, and (b) the dollar amount of any foreign 
within the meaning of section 958(a) for purposes of       income taxes allowed as a credit under section 960(b) 
section 951; and (b) for any tax year of the foreign       with respect to such PTEP.

6                                                            Partner's Inst. for Sch. K-1 (Form 1065) (2023)

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Worksheet for Adjusting the Basis of a Partner’s 
Interest in the Partnership                                                                                                                        Keep for Your Records
     Part I—Partner Basis
1.   Adjusted basis at the beginning of the tax year. Don’t enter less than zero . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          1.    

Section A—Increases
2.   Acquisitions of partnership interests and contributions of money and property . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                              2.    
3a.  Partner's share of liabilities at the end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               3a.  
3b.  Partner's share of liabilities at the beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   3b   
3c.  Increase (decrease) in partnership liabilities (subtract line 3b from line 3a) . . . . . . . . . . . . . . . .                            3c.  
3d.  Partnership liabilities assumed during the tax year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   3d.  
3e.  Increase in liabilities (add lines 3c and 3d) (If amount is negative, enter on line 9a below.) . . . . . . . . . . . . . . . . . . . . .                             3e.   
4a.  Ordinary business income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            4a.  
4b.  Net rental real estate income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           4b.  
4c.  Other net rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         4c.  
4d.  Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     4d.  
4e.  Ordinary dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        4e.  
4f.  Dividend equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        4f.  
4g.  Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4g.  
4h.  Net short-term capital gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         4h.  
4i.  Net long-term capital gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          4i.  
4j.  Net section 1231 gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         4j.  
4k.  Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4k.  
4l.  Tax-exempt income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         4l.  
4m.  Other increases to basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        4m.  
4n.  BIE (enter as a positive) (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              4n.  
4o.  Total increases (add lines 4a through 4n) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            4o.   
5.   Gain recognized on contributions of property during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     5.    
6.   Excess depletion adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        6.    
7.   Total basis before decreases (add lines 1, 2, 3e, 4o, 5, and 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    7.    
Section B—Decreases (Enter as a negative.)
8.   Withdrawals, distributions of money, and the adjusted basis of distributed property
8a.  Cash and marketable securities distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  8a.  
8b.  Distribution subject to section 737 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             8b.  
8c.  Other property distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          8c.  
8d.  Total distributions (add lines 8a through 8c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          8d.   
9a.  Decrease in partner's share of liabilities (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     9a.  
9b.  Partner's liabilities assumed by the partnership during the tax year . . . . . . . . . . . . . . . . . . . . . .                          9b.  
9c.  Decrease in liabilities (sum of lines 9a and 9b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             9c.   
10.  Total distributions and decrease in liabilities (add lines 8d and 9c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    10.   
11a. Basis after distributions (add lines 7 and 10) (If the result is negative, enter -0- on line 11a and enter the amount as a 
     positive on line 11b.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11a.  
11b. Gain on distributions in excess of basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         11b.  

Partner's Inst. for Sch. K-1 (Form 1065) (2023)                                                                                                                                 7

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Worksheet for Adjusting the Basis of a Partner’s 
Interest in the Partnership (continued)                                                                                                Keep for Your Records
       Part II—Allowable Loss and Deduction Items (Enter as a 
       negative.)
                                                                                              Column A     Column B              Column C                       Column D     Column E
                                                                                              Current      Prior-year            Total of                       Amount       Suspended 
                                                                                              year         carryforward          columns A                      reducing     carryforward
                                                                                              distributive amount                and B                          basis (see 
                                                                                              share                                                             instructions)
  12.  Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
  13.  Depletion for oil and gas . . . . . . . . . . . . . . . . . . . . . . . . . . .

  14.  Basis after nondeductible expenses and depletion (reduce line 11a by the amounts on lines 12 and 13, 
       column D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

                                                                                              Column A     Column B              Column C                       Column D     Column E
                                                                                              Current      Prior-year            Total of                       Allowable    Disallowed 
                                                                                              year         carryforward          columns A                      loss and     loss 
                                                                                              distributive amount                and B                          deductions   carryforward
                                                                                              share                                                             (see 
                                                                                                                                                                instructions)
  15a. Ordinary business loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  15b. Net rental real estate loss (excluding BIE) . . . . . . . . . . . . . .
  15c. Other net rental loss (excluding BIE) . . . . . . . . . . . . . . . . . .
  15d. Foreign taxes paid or accrued . . . . . . . . . . . . . . . . . . . . . .
  15e. Net short-term capital loss . . . . . . . . . . . . . . . . . . . . . . . . .
  15f. Net long-term capital loss . . . . . . . . . . . . . . . . . . . . . . . . . .
  15g. Net section 1231 loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  15h. Other losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  15i. Section 179 deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  Other Deductions
  15j. Charitable contributions . . . . . . . . . . . . . . . . . . . . . . . . . . .
  15k. Investment interest expense . . . . . . . . . . . . . . . . . . . . . . . .
  15l. Deductions (royalty income) . . . . . . . . . . . . . . . . . . . . . . . .
  15m. Section 59(e)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  15n. EBIE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  15o. Deductions—portfolio (other) . . . . . . . . . . . . . . . . . . . . . . .
  15p. All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  15q. BIE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  15r. Other decreases to basis . . . . . . . . . . . . . . . . . . . . . . . . . .
  15s. Subtotal (add lines 15a through 15r) . . . . . . . . . . . . . . . . . .
  15t. Total deductions and losses (add lines 15a through 15r, column C)                      . . . . . . . . . . . . . . . . . .
  16.  Allowable deductions and losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  17.  Unutilized EBIE on sale of partnership interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  18.  Adjusted basis at the end of the tax year (Enter the sum of lines 14, 16, and 17.) . . . . . . . . . . . . . . . . . . . . .

8                                                                                                          Partner's Inst. for Sch. K-1 (Form 1065) (2023)

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At-Risk Limitations 2. Rental real estate activities in which you materially
Generally, if you have (a) a loss or other deduction from participated if you were a real estate professional for the
any activity carried on as a trade or business or for the tax year. You were a real estate professional only if you
production of income by the partnership, and (b) amounts met both of the following conditions.
in the activity for which you aren’t at risk, you’ll have to a. More than half of the personal services you
complete Form 6198, At-Risk Limitations, to figure your performed in trades or businesses were performed in real
allowable loss for the activity. property trades or businesses in which you materially
participated.
The at-risk rules generally limit the amount of loss and
b. You performed more than 750 hours of services in
other deductions that you can claim to the amount you
real property trades or businesses in which you materially
could actually lose in the activity. These losses and
participated.
deductions include a loss on the disposition of assets and
the section 179 expense deduction. However, if you For a closely held C corporation (defined in
acquired your partnership interest before 1987, the at-risk TIP section 465(a)(1)(B)), the above conditions are
rules don't apply to losses from an activity of holding real treated as met if more than 50% of the
property placed in service before 1987 by the partnership. corporation's gross receipts were from real property trades
The activity of holding mineral property doesn't qualify for or businesses in which the corporation materially
this exception. The partnership should identify on a participated.
statement attached to Schedule K-1 any losses that aren't
subject to the at-risk limitations. For purposes of this rule, each interest in rental real
estate is a separate activity, unless you elect to treat all
Generally, you aren't at risk for amounts such as the interests in rental real estate as one activity. For details on
following. making this election, see the Instructions for Schedule E
• Nonrecourse loans used to finance the activity, to (Form 1040), Supplemental Income and Loss.
acquire property used in the activity, or to acquire your If you're married filing jointly, either you or your spouse
interest in the activity that aren't secured by your own must separately meet both (a) and (b) of the above
property (other than the property used in the activity). See conditions, without taking into account services performed
the instructions for item K1, later, for the exception for by the other spouse.
qualified nonrecourse financing secured by real property.
• Cash, property, or borrowed amounts used in the A real property trade or business is any real property
activity (or contributed to the activity, or used to acquire development, redevelopment, construction,
your interest in the activity) that are protected against loss reconstruction, acquisition, conversion, rental, operation,
by a guarantee, a stop-loss agreement, or other similar management, leasing, or brokerage trade or business.
arrangement (excluding casualty insurance and insurance Services you performed as an employee aren't treated as
against tort liability). performed in a real property trade or business unless you
• Amounts borrowed for use in the activity from a person owned more than 5% of the stock (or more than 5% of the
who has an interest in the activity, other than as a creditor, capital or profits interest) in the employer.
or who is related, under section 465(b)(3), to a person 3. Working interests in oil or gas wells if you were a
(other than you) having such an interest. general partner.
4. The rental of a dwelling unit any partner used for
You should get a separate statement of income,
personal purposes during the year for more than the
expenses, and other items for each activity from the
greater of 14 days or 10% of the number of days that the
partnership.
residence was rented at fair rental value.
Note. Box 22 of Schedule K-1, Part III, will be checked 5. Activities of trading personal property for the
when a statement is attached. account of owners of interests in the activities.
Passive Activity Limitations If you're an individual, an estate, or a trust, and you
have a passive activity loss or credit, use Form 8582,
Section 469 provides rules that limit the deduction of Passive Activity Loss Limitations, to figure your allowable
certain losses and credits. These rules apply to partners passive losses and Form 8582-CR, Passive Activity Credit
who: Limitations, to figure your allowable passive credits. For a
• Are individuals, estates, trusts, closely held C corporation, use Form 8810, Corporate Passive Activity
corporations, or personal service corporations; and Loss and Credit Limitations. See the instructions for these
• Have a passive activity loss or credit for the tax year. forms for details.
Generally, passive activities include the following. If the partnership had more than one activity, it’ll attach
• Trade or business activities in which you didn't a statement to your Schedule K-1 that identifies each
materially participate. activity (trade or business activity, rental real estate
• Activities that meet the definition of rental activities activity, rental activity other than rental real estate, and
under Temporary Regulations section 1.469-1T(e)(3) and other activity) and specifies the income (loss), deductions,
Regulations section 1.469-1(e)(3). and credits from each activity.

Passive activities don't include the following. Note. Box 23 of Schedule K-1, Part III, will be checked
1. Trade or business activities in which you materially when a statement is attached.
participated.

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Material participation. You must determine if you (where you own your partnership interest at the time the
materially participated (a) in each trade or business work is done) is counted toward material participation.
activity held through the partnership, and (b) if you were a However, work in connection with the activity isn't counted
real estate professional (defined earlier) in each rental real toward material participation if either of the following
estate activity held through the partnership. All applies.
determinations of material participation are based on your 1. The work isn't the type of work that owners of the
participation during the partnership's tax year. activity would usually do and one of the principal purposes
Material participation standards for partners who are of the work that you or your spouse does is to avoid the
individuals are listed below. Special rules apply to certain passive loss or credit limitations.
retired or disabled farmers and to the surviving spouses of 2. You do the work in your capacity as an investor and
farmers. See the Instructions for Form 8582 for details. you aren't directly involved in the day-to-day operations of
Corporations should refer to the Instructions for Form the activity. Examples of work done as an investor that
8810 for the material participation standards that apply to would not count toward material participation include:
them. a. Studying and reviewing financial statements or
Individuals (other than limited partners). If you're reports on operations of the activity,
an individual (either a general partner or a limited partner b. Preparing or compiling summaries or analyses of
who owned a general partnership interest at all times the finances or operations of the activity for your own use,
during the tax year), you materially participated in an and
activity only if one or more of the following apply.
c. Monitoring the finances or operations of the activity
1. You participated in the activity for more than 500 in a non-managerial capacity.
hours during the tax year.
Effect of determination. Income (loss), deductions,
2. Your participation in the activity for the tax year
and credits from an activity are nonpassive if you
constituted substantially all the participation in the activity
determine that:
of all individuals (including individuals who aren't owners
• You materially participated in a trade or business
of interests in the activity). activity of the partnership, or
3. You participated in the activity for more than 100 • You were a real estate professional (defined earlier) in a
hours during the tax year, and your participation in the rental real estate activity of the partnership.
activity for the tax year wasn't less than the participation in
If you determine that you didn't materially participate in
the activity of any other individual (including individuals
a trade or business activity of the partnership or if you
who weren't owners of interests in the activity) for the tax
have income (loss), deductions, or credits from a rental
year.
activity of the partnership (other than a rental real estate
4. The activity was a significant participation activity activity in which you materially participated as a real
for the tax year, and you participated in all significant estate professional), the amounts from that activity are
participation activities (including activities outside the passive. Report passive income (losses), deductions, and
partnership) during the year for more than 500 hours. A credits as follows.
significant participation activity is any trade or business • If you have an overall gain (the excess of income over
activity in which you participated for more than 100 hours deductions and losses, including any prior year unallowed
during the year and in which you didn't materially loss) from a passive activity, report the income,
participate under any of the material participation tests deductions, and losses from the activity as indicated in
(other than this test). these instructions.
5. You materially participated in the activity for any 5 • If you have an overall loss (the excess of deductions
tax years (whether or not consecutive) during the 10 tax and losses, including any prior year unallowed loss, over
years that immediately precede the tax year. income) or credits from a passive activity, report the
6. The activity was a personal service activity and you income, deductions, losses, and credits from all passive
materially participated in the activity for any 3 tax years activities using the Instructions for Form 8582 or the
(whether or not consecutive) preceding the tax year. A Instructions for Form 8582-CR (or Form 8810) to see if
personal service activity involves the performance of your deductions, losses, and credits are limited under the
personal services in the field of health, law, engineering, passive activity rules.
architecture, accounting, actuarial science, performing Publicly traded partnerships (PTPs). The passive
arts, or consulting, or any other trade or business in which activity limitations are applied separately for items (other
capital isn't a material income-producing factor. than the low-income housing credit and the rehabilitation
7. Based on all the facts and circumstances, you credit) from each PTP. Thus, a net passive loss from a
participated in the activity on a regular, continuous, and PTP may not be deducted from other passive income.
substantial basis during the tax year. Instead, a passive loss from a PTP is suspended and
carried forward to be applied against passive income from
Limited partners. If you're a limited partner, you must the same PTP in later years. If the partner's entire interest
meet item 1, 5, or 6 above to qualify as having materially in the PTP is completely disposed of, any unused losses
participated. are allowed in full in the year of disposition.
Work counted toward material participation.
If you have an overall gain from a PTP, the net gain is
Generally, any work that you or your spouse does in
nonpassive income. In addition, the nonpassive income is
connection with an activity held through a partnership

10 Partner's Inst. for Sch. K-1 (Form 1065) (2023)

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included in investment income to figure your investment To allocate and keep a record of the unallowed
interest expense deduction. TIP losses, use Form 8582, Parts VII, VIII, and IX. List
Don't report passive income, gains, or losses from a each activity of the PTP in Part VII. Enter the
PTP on Form 8582. Instead, use the following rules to overall loss from each activity in column (a). Complete
figure and report on the proper form or schedule your Part VII, column (b), according to its instructions. Multiply
income, gains, and losses from passive activities that you the total unallowed loss from the PTP by each ratio in
held through each PTP you owned during the tax year. column (b) and enter the result in Part VII, column (c).
Then, complete Part VIII if all the loss from the same
1. Combine any current year income, gains, and
activity is to be reported on one form or schedule. Use
losses, and any prior year unallowed losses to see if you
Part IX instead of Part VIII if you have more than one loss
have an overall gain or loss from the PTP. Include only the
to be reported on different forms or schedules for the
same types of income and losses you would include in
same activity. Enter the net loss plus any prior year
your net income or loss from a non-PTP passive activity.
unallowed losses in Part VIII, column (a) (or Part IX, if
See Pub. 925, Passive Activity and At-Risk Rules, for
applicable). The losses in Part VIII, column (c), (Part IX,
more details.
column (e)) are the allowed losses to report on the forms
2. If you have an overall gain, the net gain portion (total or schedules. Report both these losses and any income
gain minus total losses) is nonpassive income. On the from the PTP on the forms and schedules you normally
form or schedule you normally use, report the net gain use.
portion as nonpassive income and the remaining income
and the total losses as passive income and loss. To the 4. If you have an overall loss and you disposed of your
left of the entry space, enter “From PTP.” It's important to entire interest in the PTP to an unrelated person in a fully
identify the nonpassive income because the nonpassive taxable transaction during the year, your losses (including
portion is included in modified adjusted gross income prior year unallowed losses) allocable to the activity for the
(MAGI) for purposes of figuring on Form 8582 the special year aren't limited by the passive loss rules. A fully taxable
allowance for active participation in a non-PTP rental real transaction is one in which you recognize all your realized
estate activity. In addition, the nonpassive income is gain or loss. Report the income and losses on the forms
included in investment income when figuring your and schedules you normally use.
investment interest expense deduction on Form 4952, For rules on the disposition of an entire interest
Investment Interest Expense Deduction. TIP reported using the installment method, see the
Example. If you have Schedule E (Form 1040) income Instructions for Form 8582.
of $8,000, and a Form 4797, Sales of Business Property,
prior year unallowed loss of $3,500 from the passive Special allowance for a rental real estate activity. If
activities of a particular PTP, you have a $4,500 overall you actively participated in a rental real estate activity, you
gain ($8,000 − $3,500). On Schedule E (Form 1040), may be able to deduct up to $25,000 of the loss from the
line 28, report the $4,500 net gain as nonpassive income activity from nonpassive income. This special allowance is
in column (k). In column (h), report the remaining an exception to the general rule disallowing losses in
Schedule E (Form 1040) gain of $3,500 ($8,000 − excess of income from passive activities. The special
$4,500). On the appropriate line of Form 4797, report the allowance isn't available if you were married, file a
prior year unallowed loss of $3,500. Be sure to enter separate return for the year, and didn't live apart from your
“From PTP” to the left of each entry space. spouse at all times during the year.
3. If you have an overall loss (but didn't dispose of your Only individuals, qualifying estates, and qualifying
entire interest in the PTP to an unrelated person in a fully revocable trusts that made a section 645 election can
taxable transaction during the year), the losses are actively participate in a rental real estate activity. Estates
allowed to the extent of the income, and the excess loss is (other than qualifying estates), trusts (other than qualifying
carried forward to use in a future year when you have revocable trusts that made a section 645 election), and
income to offset it. Report as a passive loss on the corporations can't actively participate. Limited partners
schedule or form you normally use the portion of the loss can't actively participate unless future regulations provide
equal to the income. Report the income as passive an exception.
income on the form or schedule you normally use.
You aren't considered to actively participate in a rental
Example. You have a Schedule E (Form 1040) loss of real estate activity if, at any time during the tax year, your
$12,000 (current year losses plus prior year unallowed interest (including your spouse's interest) in the activity
losses) and a Form 4797 gain of $7,200. Report the was less than 10% (by value) of all interests in the activity.
$7,200 gain on the appropriate line of Form 4797. On Active participation is a less stringent requirement than
Schedule E (Form 1040), line 28, report $7,200 of the material participation. You may be treated as actively
losses as a passive loss in column (g). Carry forward the participating if you participated, for example, in making
unallowed loss of $4,800 ($12,000 − $7,200). management decisions or arranging for others to provide
If you have unallowed losses from more than one services (such as repairs) in a significant and bona fide
activity of the PTP or from the same activity of the PTP sense. Management decisions that can count as active
that must be reported on different forms, you must allocate participation include approving new tenants, deciding
the unallowed losses on a pro rata basis to figure the rental terms, approving capital or repair expenditures, and
amount allowed from each activity or on each form. other similar decisions.

Partner's Inst. for Sch. K-1 (Form 1065) (2023) 11

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An estate is a qualifying estate if the decedent would If you have net income (loss), deductions, or credits
have satisfied the active participation requirement for the from any of the following activities, treat such amounts as
activity for the tax year the decedent died. A qualifying nonpassive and report them as indicated in these
estate is treated as actively participating for tax years instructions.
ending less than 2 years after the date of the decedent's 1. Working interests in oil and gas wells if you're a
death. general partner.
MAGI limitation. The maximum special allowance that
2. The rental of a dwelling unit any partner used for
single individuals and married individuals filing a joint
personal purposes during the year for more than the
return can qualify for is $25,000. The maximum is $12,500
greater of 14 days or 10% of the number of days that the
for married individuals who file separate returns and who
residence was rented at fair rental value.
lived apart at all times during the year. The maximum
special allowance for which an estate can qualify is 3. Trading personal property for the account of owners
$25,000 reduced by the special allowance for which the of interests in the activity.
surviving spouse qualifies.
Self-charged interest. The partnership will report any
If your MAGI (defined below) is $100,000 or less self-charged interest income or expense that resulted from
($50,000 or less if married filing separately), your loss is loans between you and the partnership (or between the
deductible up to the maximum special allowance referred partnership and another partnership or S corporation if
to in the preceding paragraph. If your MAGI is more than both entities have the same owners with the same
$100,000 (more than $50,000 if married filing separately), proportional ownership interest in each entity). If there was
the special allowance is limited to 50% of the difference more than one activity, the partnership will provide a
between $150,000 ($75,000 if married filing separately) statement allocating the interest income or expense with
and your MAGI. When MAGI is $150,000 or more respect to each activity. The self-charged interest rules
($75,000 or more if married filing separately), there is no don't apply to your partnership interest if the partnership
special allowance. made an election under Regulations section 1.469-7(g) to
MAGI. This is your adjusted gross income (AGI) from avoid the application of these rules. See the Instructions
Form 1040 or 1040-SR, line 11, figured without taking into for Form 8582 for details.
account:
1. The taxable amount of social security or equivalent Excess Business Loss
tier 1 railroad retirement benefits, Your distributive share of losses attributable to all of the
2. The deductible contributions to traditional IRAs and partnership's trades or businesses may be limited under
section 501(c)(18) pension plans, section 461(l). See Form 461, Limitation on Business
Losses, and its instructions for more information.
3. The exclusion from income of interest from series
EE or I U.S. savings bonds used to pay higher education
expenses, Specific Instructions
4. The exclusion of amounts received under an
employer's adoption assistance program, Part I. Information About the
5. Any passive activity income or loss included on Partnership
Form 8582,
6. Any rental real estate loss allowed to real estate Item D
professionals, If the box in item D is checked, you're a partner in a PTP
and must follow the rules discussed earlier under Publicly
7. Any overall loss from a PTP (see Publicly Traded
traded partnerships.
Partnerships (PTPs) in the Instructions for Form 8582),
8. The deduction allowed for one-half of
self-employment tax, Part II. Information About the Partner

9. The deduction allowed for interest paid on student Item E
loans, and
If the partner is an individual, the partnership will enter the
10. The deduction allowed for foreign-derived intangible partner's SSN or individual taxpayer identification number
income and GILTI. (ITIN). For all other partners, the partnership will enter the
partner's employer identification number (EIN). In the case
Special rules for certain other activities. If you have
of a disregarded entity (DE), the partnership will enter the
net income (loss), deductions, or credits from any activity
TIN of the beneficial owner of the DE in item E and the
to which special rules apply, the partnership will identify
beneficial owner's address in item F.
the activity and all amounts relating to it on Schedule K-1
or on an attached statement. If the partner is an IRA, the partnership will enter the
If you have net income subject to recharacterization identifying number of the custodian of the IRA.
under Temporary Regulations section 1.469-2T(f) and
Regulations sections 1.469-2(f)(5) and (6), report such For your protection, this form may show only the last
amounts according to the Instructions for Form 8582 (or four digits of the TIN in items E and H2, as noted under
Form 8810). Purpose of Schedule K-1, earlier. However, the
partnership has reported your complete identification
number to the IRS.

12 Partner's Inst. for Sch. K-1 (Form 1065) (2023)

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Item H2 If your partnership is engaged in two or more different
If the partner is a DE, such as a single-member LLC that types of activities subject to the at-risk provisions, or a
didn’t elect to be treated as a corporation, the partnership combination of at-risk activities and any other activity, the
will check the DE box and enter the name and TIN of the partnership should give you a statement showing your
DE. share of nonrecourse liabilities, partnership-level qualified
nonrecourse financing, and other recourse liabilities for
Item J each activity.
Generally, the amounts reported in item J are based on Qualified nonrecourse financing secured by real
the partnership agreement. If your interest commenced property used in an activity of holding real property that's
after the beginning of the partnership's tax year, the subject to the at-risk rules is treated as an amount at risk.
partnership will have entered, in the Beginning column, Qualified nonrecourse financing generally includes
the percentages that existed for you immediately after financing for which no one is personally liable for
admission. If your interest terminated before the end of the repayment that's borrowed for use in an activity of holding
partnership's tax year, the partnership will have entered, in real property and that's loaned or guaranteed by a federal,
the Ending column, the percentages that existed state, or local government or borrowed from a qualified
immediately before termination. person.
The ending percentage share shown on the Capital line Qualified persons include any persons actively and
is the portion of the capital you would receive if the regularly engaged in the business of lending money, such
partnership was liquidated at the end of its tax year by the as a bank or savings and loan association. Qualified
distribution of undivided interests in the partnership's persons generally don't include related parties (unless the
assets and liabilities. If your capital account is negative or nonrecourse financing is commercially reasonable and on
zero, the partnership will have entered zero on this line. substantially the same terms as loans involving unrelated
persons), the seller of the property, or a person who
There are two options the partnership can use to receives a fee for the partnership's investment in the real
indicate the source of a decrease: sale or exchange. The property.
Sale checkbox will be checked if you sold all or part of
your partnership interest to a new or pre-existing partner See Pub. 925 for more information on qualified
during this tax year, regardless of whether you recognized nonrecourse financing.
gain or loss on the transaction(s). The Exchange Both the partnership and you must meet the qualified
checkbox will be checked if you exchanged all or part of nonrecourse rules on this debt before you can include the
your partnership interest with a new or pre-existing partner amount shown next to Qualified nonrecourse financing in
during this tax year, regardless of whether you recognized your at-risk computation.
gain or loss on the transaction(s). You may have realized a
See Limitations on Losses, Deductions, and Credits,
gain or loss on the transfer or disposition of your interest.
earlier, for more information on the at-risk limitations.
See codes AB, AC, and AD on line 20 for items that have
special gain or loss treatment. For more information, see Item K3
Disposition of Partner's Interest and Partnership
Distributions in Pub. 541. If the box in item K3 is checked, see the instructions for
box 20, code X, for additional information.
Item K1
Item L
Item K1 should show your share of the partnership's
nonrecourse liabilities, partnership-level qualified The partnership must report your beginning capital
nonrecourse financing, and other recourse liabilities at the account and ending capital account for the year using the
beginning and the end of the partnership's tax year. If you tax-basis method, including the amount of capital you
terminated your interest in the partnership during the tax contributed to the partnership during the year, your share
year, item K1 should show the share that existed of the partnership's current year net income or loss as
immediately before the total disposition. A partner's computed for tax purposes, any withdrawals and
recourse liability is any partnership liability for which a distributions made to you by the partnership, and any
partner is personally liable. other increases or decreases to your capital account
determined in a manner generally consistent with figuring
If this partnership invested in other partnerships, item the partner's adjusted tax basis in its partnership interest
K1 will include your share of partnership liabilities from (without regard to partnership liabilities), taking into
those other partnerships, except to the extent the liabilities account the rules and principles of sections 705, 722, 733,
from those other partnerships are owed to this and 742. See the Instructions for Form 1065 for more
partnership. details.
Use the total of the three amounts for figuring the For many reasons, your ending capital account as
adjusted basis of your partnership interest. reported to you by the partnership in item L may not equal
the adjusted tax basis in your partnership interest.
Generally, you may use only the amounts shown next to Generally, this is because a partner's adjusted tax basis in
Qualified nonrecourse financing and Recourse to figure its partnership interest includes the partner's share of
your amount at risk. Don't include any amounts that aren't partnership liabilities (and capital accounts determined by
at risk if such amounts are included in either of these using the tax-basis method don't). In addition, your
categories. partnership may not have all the necessary information

Partner's Inst. for Sch. K-1 (Form 1065) (2023) 13

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from you to accurately figure the adjusted tax basis in your amortization, the partnership will report these items on
partnership interest due to partner-level adjustments. other parts of Schedule K-1.
You're responsible for maintaining an annual record of the
adjusted tax basis in your partnership interest as Note. Although the partnership is reporting the beginning
determined under the principles and provisions of and ending balances on an aggregate net basis, it's
subchapter K, including, for example, those under generally required to keep records of this information on a
sections 705, 722, 733, and 742. Regulations section property-by-property basis.
1.705-1(a)(1) provides that a partner is required to
determine the adjusted basis of its interest in a Part III. Partner's Share of Current
partnership when necessary to determine its tax liability or
that of any other person. For example, a determination is Year Income, Deductions, Credits,
required in ascertaining the extent to which a partner's and Other Items
share of loss is allowed, when there is a sale or exchange The amounts shown in boxes 1 through 21 reflect your
of all or part of a partnership interest, and when a partner's share of income, loss, deductions, credits, and other items
entire partnership interest is liquidated. The adjusted from partnership business or rental activities without
basis of a partner's interest in a partnership is determined reference to limitations on losses or adjustments that may
without regard to any amount shown in the partnership be required of you because of:
books as the partner's capital, equity, or similar account.
1. The adjusted basis of your partnership interest,
Item M 2. The amount for which you're at risk, and
If you’ve contributed property with a built-in gain or loss 3. The passive activity limitations.
during the tax year, the partnership will check the “Yes”
box. Also, the partnership will attach a statement showing For information on these provisions, see Limitations on
the property contributed, the date of the contribution, and Losses, Deductions, and Credits, earlier.
the amount of any built-in gain or loss. A built-in gain or Other limitations may apply to specific deductions (for
loss is the difference between the FMV of the property example, the section 179 expense deduction). Generally,
and your adjusted basis in the property at the time it was specific limitations apply before the at-risk and passive
contributed to the partnership. If you contributed more loss limitations.
than 10 properties on a single date during the tax year, the
statement may instead show the number of properties If you're an individual and the passive activity rules
contributed on that date, the total amount of built-in gain, don't apply to the amounts shown on your Schedule K-1,
and the total amount of built-in loss. take the amounts shown and enter them on the
appropriate lines of your tax return. If the passive activity
The partnership is providing this for your information. rules do apply, report the amounts shown as indicated in
Contributions of property with a built-in gain or loss could these instructions.
affect a partner's tax liability (in matters concerning
precontribution gain or loss, and distributions subject to If you aren't an individual, report the amounts in each
section 737) and may also affect how the partnership box as instructed on your tax return.
allocated certain items on your Schedule K-1. For If you file your tax return on a calendar-year basis, but
information on precontribution gain or loss, see the your partnership files a return for a fiscal year, report the
instructions for box 20, code W. For information on amounts on your tax return for the year in which the
distributions subject to section 737, see the instructions partnership's fiscal year ends. For example, if the
for box 19, code B. partnership's tax year ends in February 2024, report the
Item N amounts on your 2024 tax return.
If you're allocated a share of section 704(c) gain or loss, If you have losses, deductions, or credits from a prior
the partnership will report your net unrecognized section year that weren’t deductible or usable because of certain
704(c) gain or loss both at the beginning and at the end of limitations, such as the basis limitations or the at-risk
the partnership's tax year in item N. The partnership can limitations, take them into account in determining your net
use any reasonable method in reporting net unrecognized income, loss, or credits for this year. However, except for
section 704(c) built-in gain or loss to you. You'll be passive activity losses and credits, don't combine the prior
allocated unrecognized section 704(c) gain or loss if: year amounts with any amounts shown on this
• You contributed property with FMV in excess of Schedule K-1 to get a net figure to report on any
adjusted tax basis (built-in gain property); supporting schedules, statements, or forms attached to
• You contributed property with FMV less than adjusted your return. Instead, report the amounts on the attached
tax basis (built-in loss property); or schedule, statement, or form on a year-by-year basis.
• The partnership elected, under certain circumstances, If the partnership reports a section 743(b) adjustment
to revalue property (book-up or book-down) on its books to partnership items, report these adjustments as
to reflect changes in the FMV of such property. These separate items on Form 1040 or 1040-SR in accordance
revaluations are sometimes referred to as “reverse section with the reporting instructions for the partnership item
704(c) allocations.” being adjusted. A section 743(b) adjustment increases or
The partnership is providing this for your information. If decreases your share of income, deduction, gain, or loss
the partnership disposes of the property or there are for a partnership item. For example, if the partnership
special allocations due to depreciation, depletion, or reports a section 743(b) adjustment to depreciation for

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property used in its trade or business, report the more than one rental real estate activity, it'll attach a
adjustment on Schedule E (Form 1040), line 28, in statement identifying the income or loss from each activity.
accordance with the instructions for box 1 of
Schedule K-1. If you're filing a 2023 Form 1040 or 1040-SR, use the
following instructions to determine where to report a box 2
If you have amounts other than those shown on amount.
TIP Schedule K-1 to report on Schedule E (Form 1. If you have a loss from a passive activity in box 2
1040), enter each item separately on Schedule E and you meet all the following conditions, report the loss
(Form 1040), line 28. on Schedule E (Form 1040), line 28, column (g).
Codes. In box 11, boxes 13 through 15, and boxes 17 a. You actively participated in the partnership rental
through 20, the partnership will identify each item by real estate activities. See Special allowance for a rental
entering a code in the column to the left of the dollar real estate activity, earlier.
amount entry space. These codes are identified under List b. Rental real estate activities with active participation
of Codes and References Used in Schedule K-1 (Form were your only passive activities.
1065) at the end of these instructions. c. You have no prior year unallowed losses from these
Attached statements. The partnership will enter an activities.
asterisk (*) after the code, if any, in the column to the left of d. Your total loss from the rental real estate activities
the dollar amount entry space for each item for which it wasn't more than $25,000 (not more than $12,500 if
has attached a statement providing additional information. married filing separately and you lived apart from your
For those informational items that can’t be reported as a spouse all year).
single dollar amount, the partnership will enter an asterisk e. If you're a married person filing separately, you lived
(*) in the left column and enter “STMT” in the dollar apart from your spouse all year.
amount entry space to indicate the information is provided
on an attached statement. f. You have no current or prior year unallowed credits
from a passive activity.
g. Your MAGI wasn’t more than $100,000 (not more
Income (Loss)
than $50,000 if married filing separately and you lived
Box 1. Ordinary Business Income (Loss) apart from your spouse all year).
The amount reported in box 1 is your share of the ordinary h. Your interest in the rental real estate activity wasn't
income (loss) from trade or business activities of the held as a limited partner.
partnership. Generally, where you report this amount on 2. If you have a loss from a passive activity in box 2
Form 1040 or 1040-SR depends on whether the amount is and you don't meet all the conditions in (1) above, follow
from an activity that's a passive activity to you. If you're an the Instructions for Form 8582 to figure how much of the
individual partner filing a 2023 Form 1040 or 1040-SR, loss you can report on Schedule E (Form 1040), line 28,
find your situation below and report your box 1 income column (g). However, if the box in item D is checked,
(loss) as instructed, after applying the basis and at-risk report the loss following the rules for Publicly traded
limitations on losses. If the partnership had more than one partnerships, earlier.
trade or business activity, it will attach a statement 3. If you were a real estate professional and you
identifying the income or loss from each activity. materially participated in the activity, report box 2 income
1. Report box 1 income (loss) from partnership trade (loss) on Schedule E (Form 1040), line 28, column (i) or
or business activities in which you materially participated (k).
on Schedule E (Form 1040), line 28, column (i) or (k). 4. If you have income from a passive activity in box 2,
2. Report box 1 income (loss) from partnership trade report the income on Schedule E (Form 1040), line 28,
or business activities in which you didn't materially column (h). However, if the box in item D is checked,
participate, as follows. report the income following the rules for Publicly traded
a. If income is reported in box 1, report the income on partnerships, earlier.
Schedule E (Form 1040), line 28, column (h). However, if
Box 3. Other Net Rental Income (Loss)
the box in item D is checked, report the income following
the rules for Publicly traded partnerships, earlier. The amount in box 3 is a passive activity amount for all
partners. If the partnership had more than one rental
b. If a loss is reported in box 1, follow the Instructions activity, it'll attach a statement identifying the income or
for Form 8582 to figure how much of the loss can be loss from each activity. Report the income or loss as
reported on Schedule E (Form 1040), line 28, column (g). follows.
However, if the box in item D is checked, report the loss If box 3 is a loss, follow the Instructions for Form 8582 to
•
following the rules for Publicly traded partnerships, earlier. figure how much of the loss can be reported on
Box 2. Net Rental Real Estate Income (Loss) Schedule E (Form 1040), line 28, column (g). However, if
the box in item D is checked, report the loss following the
Generally, the income (loss) reported in box 2 is a passive rules for Publicly traded partnerships, earlier.
activity amount for all partners. However, the income If income is reported in box 3, report the income on
•
(loss) in box 2 isn't from a passive activity if you were a Schedule E (Form 1040), line 28, column (h). However, if
real estate professional (defined earlier) and you the box in item D is checked, report the income following
materially participated in the activity. If the partnership had the rules for Publicly traded partnerships, earlier.

Partner's Inst. for Sch. K-1 (Form 1065) (2023) 15

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Box 4a. Guaranteed Payments for Services therefore excludable from your gross income. Don't
Guaranteed payments are payments made by a include the amount attributable to PTEP in your annual
partnership to a partner that are determined without PTEP accounts on Form 1040 or 1040-SR, line 3a. Use
regard to the partnership's income. Generally, amounts on Schedule K-3, Part V, to determine your share of
this line aren't passive income, and you should report distributions by foreign corporations to the partnership that
them on Schedule E (Form 1040), line 28, column (k) (for are attributable to PTEP in your annual PTEP accounts
example, guaranteed payments for personal services). with respect to the foreign corporations.
Qualified dividends are excluded from investment
Box 4b. Guaranteed Payments for Capital TIP income, but you may elect to include part or all of
These are guaranteed payments other than for services, these amounts in investment income. See the
such as for the use of capital or attributable to section instructions for Form 4952, line 4g, for important
736(a)(2) payments for unrealized receivables or goodwill. information on making this election.
Amounts on this line should be reported on Schedule E
(Form 1040), line 28, column (k) (for example, guaranteed If you have any foreign source qualified dividends,
payments for capital). ! see the Partner’s Instructions for Schedule K-3 for
CAUTION additional information.
Box 4c. Total Guaranteed Payments
Amounts on this line include total guaranteed payments Attach a statement to the Schedule K-1 identifying the
paid to you by the partnership. dividends included in box 6a or 6b that are:
• Eligible for the deduction for dividends received under
Portfolio Income section 243(a), (b), or (c);
Portfolio income or loss (shown in boxes 5 through 9b and • Eligible for the deduction for dividends received under
in box 11, code A) isn't subject to the passive activity section 245;
limitations. Portfolio income includes income (not derived • Eligible for the deduction for dividends received under
in the ordinary course of a trade or business) from section 245A; and
interest, ordinary dividends, annuities or royalties, and • Hybrid dividends as defined in section 245A(e)(4).
gain or loss on the sale of property that produces such
income or is held for investment. Box 6c. Dividend Equivalents
Dividend equivalents aren't reported on Form 1040 or
Box 5. Interest Income 1040-SR. This information is provided for persons that
Report interest income on Form 1040 or 1040-SR, line 2b. aren't U.S. persons, who are generally required to treat
If the amount of interest income included in box 5 includes dividend equivalents as U.S. source dividends, and
interest from the credit for holders of clean renewable domestic partnerships with partners who may need this
energy bonds, the partnership will attach a statement to information. The ordinary dividends amount in box 6a
Schedule K-1 showing your share of interest income from doesn't include the amount of dividend equivalents.
these credits. Because the basis of your interest in the
partnership has been increased by your share of the Box 7. Royalties
interest income from these credits, you must reduce your Report royalties on Schedule E (Form 1040), line 4.
basis by the same amount. See the line 4d instructions for
the Worksheet for Adjusting the Basis of a Partner’s Box 8. Net Short-Term Capital Gain (Loss)
Interest in the Partnership. Report the net short-term capital gain (loss) on
Schedule D (Form 1040), line 5.
Box 6a. Ordinary Dividends
Report ordinary dividends on Form 1040 or 1040-SR, Box 9a. Net Long-Term Capital Gain (Loss)
line 3b. Report the net long-term capital gain (loss) on Schedule D
Some of the amounts reported in this box may be (Form 1040), line 12.
attributable to PTEP in annual PTEP accounts that you If you have any foreign source net long-term
have with respect to a foreign corporation and are ! capital gain (loss), see the Partner’s Instructions
therefore excludable from your gross income. Don't CAUTION for Schedule K-3 for additional information.
include the amount attributable to PTEP in your annual
PTEP accounts on Form 1040 or 1040-SR, line 3b. Use Box 9b. Collectibles (28%) Gain (Loss)
Schedule K-3, Part V, to determine your share of
distributions by foreign corporations to the partnership that Report collectibles gain or loss on line 4 of the 28% Rate
are attributable to PTEP in your annual PTEP accounts Gain Worksheet—Line 18 in the Instructions for
with respect to the foreign corporations. Schedule D (Form 1040).
If you have any foreign source collectibles (28%)
Box 6b. Qualified Dividends ! gain (loss), see the Partner’s Instructions for
Report any qualified dividends on Form 1040 or 1040-SR, CAUTION Schedule K-3 for additional information.
line 3a.
Some of the amounts reported in this box may be Box 9c. Unrecaptured Section 1250 Gain
attributable to PTEP in annual PTEP accounts that you There are three types of unrecaptured section 1250 gain.
have with respect to a foreign corporation and are Report your share of this unrecaptured gain on the

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Unrecaptured Section 1250 Gain Worksheet—Line 19 in expenses that you report in Schedule E (Form 1040),
the Instructions for Schedule D (Form 1040) as follows. line 38, column (e).
• Report unrecaptured section 1250 gain from the sale or
Code B. Involuntary conversions. This is your net gain
exchange of the partnership's business assets on line 5.
(loss) from involuntary conversions due to casualty or
• Report unrecaptured section 1250 gain from the sale or
theft. The partnership will give you a statement that shows
exchange of an interest in a partnership on line 10.
the amounts to be reported in Form 4684, Casualties and
• Report unrecaptured section 1250 gain from an estate,
Thefts, line 34, columns (b)(i), (b)(ii), and (c).
trust, regulated investment company (RIC), or real estate
investment trust (REIT) on line 11. If there was a gain (loss) from a casualty or theft to
property not used in a trade or business or for
If the partnership reports only unrecaptured section income-producing purposes, the partnership will provide
1250 gain from the sale or exchange of its business you with the information you need to complete Form 4684.
assets, it'll enter a dollar amount in box 9c. If it reports the
other two types of unrecaptured gain, it'll provide an Code C. Section 1256 contracts and straddles. The
attached statement that shows the amount for each type partnership will report any net gain or loss from section
of unrecaptured section 1250 gain. 1256 contracts. Report this amount on Form 6781, Gains
and Losses From Section 1256 Contracts and Straddles.
If you have any foreign source unrecaptured
Code D. Mining exploration costs recapture. The
! section 1250 gain, see the Partner’s Instructions partnership will give you a statement that shows the
CAUTION for Schedule K-3 for additional information.
information needed to recapture certain mining
exploration costs (section 617). See the 2022 Pub. 535,
Box 10. Net Section 1231 Gain (Loss) Business Expenses, for details.
The amount in box 10 is generally passive if it's from a:
Code E. Cancellation of debt. Generally, this
• Rental activity, or
cancellation of debt (COD) amount is included in your
• Trade or business activity in which you didn't materially
gross income (Schedule 1 (Form 1040), line 8c). Under
participate.
section 108(b)(5), you may elect to apply any portion of
However, an amount from a rental real estate activity the COD amount excluded from gross income to the
isn't from a passive activity if you were a real estate reduction of the basis of depreciable property. See Form
professional (defined earlier) and you materially 982, Reduction of Tax Attributes Due to Discharge of
participated in the activity. Indebtedness, for more details.
If the amount is either (a) a loss that isn't from a passive Code F. Section 743(b) positive income adjustments.
activity or (b) a gain, report it in Form 4797, line 2, column The partnership will use this code to report the net positive
(g). Don't complete Form 4797, line 2, columns (b) income adjustment resulting from all section 743(b) basis
through (f). Instead, enter “From Schedule K-1 (Form adjustments. The partnership will provide your section
1065)” across these columns. 743(b) adjustment net of cost recovery at year end by
asset grouping in box 20, code U.
If the amount is a loss from a passive activity, see
Passive Loss Limitations in the Instructions for Form 4797. Code G. Reserved for future use.
Report the loss following the Instructions for Form 8582 to Code H. Section 951(a) income inclusions. If the
figure how much of the loss is allowed on Form 4797. partnership is a domestic partnership that doesn't apply
However, if the box in item D is checked, report the loss Regulations sections 1.958-1(d)(1) through (3) to a tax
following the rules for Publicly traded partnerships, earlier. year of a foreign corporation that begins before January
If the partnership had net section 1231 gain (loss) from 25, 2022, to treat it as not owning stock of the foreign
more than one activity, it’ll attach a statement that will corporation within the meaning of section 958(a) for
identify the section 1231 gain (loss) from each activity. purposes of section 951, and is a U.S. shareholder of the
If you have any foreign source net section 1231 foreign corporation, then any section 951(a) income
inclusions with respect to the foreign corporation and such
! gain (loss), see the Partner’s Instructions for tax year are section 951(a) income inclusions of the
CAUTION Schedule K-3 for additional information.
partnership, a distributive share of which you generally
include in gross income. The partnership will use this
Box 11. Other Income (Loss) code to report your share of its section 951(a) income
Code A. Other portfolio income (loss). The inclusions. Additionally, if the partnership has a distributive
partnership will report portfolio income other than interest, share of a lower-tier partnership's section 951(a) income
ordinary dividend, royalty, and capital gain (loss) income, inclusions, the partnership will use this code to report your
and attach a statement to tell you what kind of portfolio share of that inclusion.
income is reported.
Note. In all other cases, the partnership will report
If the partnership held a residual interest in a real estate information needed for you to determine section 951(a)
mortgage investment conduit (REMIC), it’ll report on the income inclusions with respect to CFCs owned by the
statement your share of REMIC taxable income (net loss) partnership, directly or indirectly, on Schedule K-3, Part VI.
that you report in Schedule E (Form 1040), line 38, column
(d). The statement will also report your share of any The partnership will attach a statement to the
excess inclusion that you report in Schedule E (Form Schedule K-1 identifying any subpart F inclusion
1040), line 38, column (c), and your share of section 212 attributable to:

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• The sale or exchange by a CFC of stock in another Opting out of partnership election. You can opt out
foreign corporation described in section 964(e)(4), or of the partnership's section 1045 election and either (a)
• Hybrid dividends of tiered corporations under section recognize the gain, or (b) elect to purchase different
245A(e)(2). replacement QSB stock, either directly or through
ownership of a different partnership that acquired
Code I. Gain (loss) from disposition of oil, gas, geo-
replacement QSB stock. You satisfy the requirement to
thermal, or other mineral properties (section 59(e)).
purchase replacement QSB stock if you own an interest in
The partnership will attach a statement that provides a
a partnership that purchases QSB stock during the 60-day
description of the property; your share of the amount
period. You must also notify the partnership, in writing, if
realized from the disposition; your share of the
you opt out of the partnership's section 1045 election. If
partnership's adjusted basis in the property (for other than
you recognize gain, you must notify the partnership, in
oil or gas properties); and your share of the total intangible
writing, of the amount of the gain that you're recognizing.
drilling costs, development costs, and mining exploration
costs (section 59(e) expenditures) passed through for the Code N. Gain eligible for section 1045 rollover (re-
property. You must figure your gain or loss from the placement stock not purchased by the partnership).
disposition by increasing your share of the adjusted basis The partnership should give you (a) the name of the
by the intangible drilling costs, development costs, or mine corporation that issued the QSB stock, (b) your share of
exploration costs for the property that you capitalized (that the partnership's adjusted basis and sales price of the
is, costs that you didn't elect to deduct under section QSB stock, (c) the dates the QSB stock was bought and
59(e)). Report a loss on Form 4797, Part I. Report a gain sold, and (d) your share of gain from the sale of the QSB
on Form 4797, Part III, in accordance with the instructions stock. Corporate partners aren't eligible for the section
for line 28. See Regulations section 1.1254-5 for details. 1045 rollover. To qualify for the section 1045 rollover:
Code J. Recoveries of tax benefit items. A tax benefit • You must have held an interest in the partnership during
the entire period in which the partnership held the QSB
item is an amount you deducted in a prior tax year that
stock,
reduced your income tax. Report this amount on Schedule
1 (Form 1040), line 8z, to the extent it reduced your tax in • Your share of the gain eligible for the section 1045
rollover can't exceed the amount that would have been
the prior tax year.
allocated to you based on your interest in the partnership
Code K. Gambling gains and losses. If the partnership at the time the QSB stock was acquired, and
wasn't engaged in the trade or business of gambling, (a) • You must purchase other QSB stock (as defined in the
report gambling winnings on Schedule 1 (Form 1040), Instructions for Schedule D (Form 1040)) during the
line 8b; and (b) deduct gambling losses to the extent of 60-day period that began on the date the QSB stock was
winnings on Schedule A (Form 1040), line 16. sold by the partnership.
If the partnership was engaged in the trade or business See the Instructions for Schedule D (Form 1040) and
of gambling, (a) report gambling winnings on Schedule E the Instructions for Form 8949 for details on how to report
(Form 1040), line 28, column (k); and (b) deduct gambling the gain and the amount of the allowable postponed gain.
losses (to the extent of winnings) on Schedule E (Form Making the section 1045 election. You make a
1040), line 28, column (i). section 1045 election on a timely filed return for the tax
Code L. Any income, gain, or loss to the partnership year during which the partnership's tax year ends. See the
from a distribution under section 751(b) (certain dis- Instructions for Form 8949 and the Instructions for
tributions treated as sales or exchanges). Report this Schedule D (Form 1040) for more information. Attach to
amount on Form 4797, line 10. your Schedule D (Form 1040) a statement that includes
the following information for each amount of gain that you
Code M. Gain eligible for section 1045 rollover (re- don't recognize under section 1045.
placement stock purchased by partnership). The • The name of the corporation that issued the QSB stock.
partnership should give you (a) the name of the • The name and EIN of the selling partnership.
corporation that issued the qualified small business (QSB) • The dates the QSB stock was purchased and sold.
stock, (b) your share of the partnership's adjusted basis • The amount of gain that isn't recognized under section
and sales price of the QSB stock, (c) the dates the QSB 1045.
stock was bought and sold, (d) your share of gain from the • If a partner purchases QSB stock, the name of the
sale of the QSB stock, and (e) your share of the gain that corporation that issued the replacement QSB stock, the
was deferred by the partnership under section 1045. date the stock was purchased, and the cost of the stock.
Corporate partners aren't eligible for the section 1045 • If a partner treats the partner's interest in QSB stock
rollover. To qualify for the section 1045 rollover: that's purchased by a purchasing partnership as the
• You must have held an interest in the partnership during partner's replacement QSB stock, the name and EIN of
the entire period in which the partnership held the QSB the purchasing partnership, the name of the corporation
stock (more than 6 months prior to the sale), and that issued the replacement QSB stock, the partner's
• Your share of the gain eligible for the section 1045 share of the cost of the QSB stock that was purchased by
rollover can't exceed the amount that would have been the partnership, the computation of the partner's
allocated to you based on your interest in the partnership adjustment to basis with respect to that QSB stock, and
at the time the QSB stock was acquired. the date the stock was purchased by the partnership.
See the Instructions for Schedule D (Form 1040) and Distribution of replacement QSB stock to a partner
the Instructions for Form 8949 for details on how to report that reduces another partner's interest in
the gain and the amount of the allowable postponed gain.

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replacement QSB stock. You must recognize gain upon section 3(w)(1) of the Federal Deposit Insurance Act),
a distribution of replacement QSB stock to another partner report the gain or loss in accordance with the Instructions
that reduces your share of the replacement QSB stock for Form 4797, and Rev. Proc. 2008-64, 2008-47 I.R.B.
held by a partnership. The amount of gain that you must 1195.
recognize is based on the amount of gain that you would
Code R. Specially allocated ordinary gain (loss).
recognize upon a sale of the distributed replacement QSB
Report this amount on Form 4797, line 10.
stock for its FMV on the date of the distribution, but not to
exceed the amount you previously deferred under section Code S. Non-portfolio capital gain (loss). Net
1045 with respect to the distributed replacement QSB short-term capital gain (loss) and net long-term capital
stock. If the partnership distributed your share of gain (loss) from Schedule D (Form 1065) that aren’t
replacement QSB stock to another partner, the portfolio income. An example is gain or loss from the
partnership should give you (a) the name of the disposition of nondepreciable personal property used in a
corporation that issued the replacement QSB stock, (b) trade or business activity of the partnership. Report total
the date the replacement QSB stock was distributed to net short-term gain (loss) on Schedule D (Form 1040),
another partner or partners, and (c) your share of the line 5. Report the total net long-term gain (loss) on
partnership's adjusted basis and FMV of the replacement Schedule D (Form 1040), line 12.
QSB stock on such date. Codes T through X. Reserved for future use.
For more information, see Regulations section
Code ZZ. Other. Any other information you may need to
1.1045-1.
file your tax return.
Code O. Sale or exchange of QSB stock with section Report loss items that are passive activity amounts to
1202 exclusion. Gain from the sale or exchange of QSB you following the Instructions for Form 8582. However, if
stock (as defined in the Instructions for Schedule D (Form the box in item D is checked, report the loss following the
1065)) that's eligible for a section 1202 exclusion. The rules for Publicly traded partnerships, earlier.
partnership should also give you (a) the name of the
corporation that issued the QSB stock, (b) your share of
Deductions
the partnership's adjusted basis and sales price of the
QSB stock, and (c) the dates the QSB stock was bought Box 12. Section 179 Deduction
and sold. Corporate partners aren't eligible for the section
1202 exclusion. The following additional limitations apply Use this amount, along with the total cost of section 179
at the partner level. property placed in service during the year from other
• You must have held an interest in the partnership when sources, to complete Part I of Form 4562, Depreciation
the partnership acquired the QSB stock and at all times and Amortization. The partnership will report on an
thereafter until the partnership disposed of the QSB stock. attached statement your allowable share of the cost of any
• Your share of the eligible section 1202 gain can't qualified enterprise zone or qualified real property it
exceed the amount that would have been allocated to you placed in service during the tax year. Report the amount
based on your interest in the partnership at the time the from Form 4562, line 12, allocable to a passive activity
QSB stock was acquired. using the Instructions for Form 8582. If the amount isn't a
passive activity deduction, report it on Schedule E (Form
See the Instructions for Schedule D (Form 1040) and 1040), line 28, column (j). However, if the box in item D is
the Instructions for Form 8949 for details on how to report checked, report this amount following the rules for Publicly
the gain and the amount of the allowable exclusion. traded partnerships, earlier.
Code P. Gain or loss on disposition of farm recapture
property and other items to which section 1252 ap- Box 13. Other Deductions
plies. Partnership gains from the disposition of farm Contributions. Codes A through G. The partnership
recapture property (see the instructions for Form 4797, will give you a statement that shows charitable
line 27) and other items to which section 1252 applies. contributions subject to the 100%, 60%, 50%, 30%, and
Code Q. Gain or loss on Fannie Mae or Freddie Mac 20% AGI limitations. For more details, see Pub. 526,
qualified preferred stock. Gain or loss attributable to Charitable Contributions, and the Instructions for
the sale or exchange of qualified preferred stock of the Schedule A (Form 1040). If your contributions are subject
Federal National Mortgage Association (Fannie Mae) and to more than one of the AGI limitations, see Worksheet 2
the Federal Home Loan Mortgage Corporation (Freddie in Pub. 526.
Mac). The partnership will report on an attached Charitable contribution deductions aren't taken into
statement the amount of gain or loss attributable to the account in figuring your passive activity loss for the year.
sale or exchange of the qualified preferred stock, the date Don't include them on Form 8582.
the stock was acquired by the partnership, and the date
Code A. Cash contributions (60%). Report this
the stock was sold or exchanged by the partnership. If the
amount, subject to the 60% AGI limitation, on Schedule A
partner isn’t a financial institution, report the gain or loss
(Form 1040), line 11.
on Schedule D (Form 1040), line 5 or line 12, in
accordance with the Instructions for Schedule D (Form Code B. Cash contributions (30%). Report this
1040) and the Instructions for Form 8949. If a partner is a amount, subject to the 30% AGI limitation, on Schedule A
financial institution referred to in section 582(c)(2) or a (Form 1040), line 11.
depositary institution holding company (as defined in

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Code C. Noncash contributions (50%). If property Code D. Noncash contributions (30%). Report this
other than cash is contributed, and if the claimed amount, subject to the 30% AGI limitation, on Schedule A
deduction for one item or group of similar items of (Form 1040), line 12.
property exceeds $500, the partnership must give you a
Code E. Capital gain property to a 50% organization
copy of Form 8283, Noncash Charitable Contributions, to
(30%). Report this amount, subject to the 30% AGI
attach to your tax return. Don't deduct the amount shown
limitation, on Schedule A (Form 1040), line 12. See
on Form 8283. It's the partnership's contribution. Instead,
Worksheet 2 in Pub. 526.
deduct the amount identified by code C in box 13, subject
to the 50% AGI limitation, on Schedule A (Form 1040), Code F. Capital gain property (20%). Report this
line 12. amount, subject to the 20% AGI limitation, on Schedule A
If the partnership provides you with information that the (Form 1040), line 12.
contribution was property other than cash and doesn't Code G. Contributions (100%). The partnership will
give you a Form 8283, see the Instructions for Form 8283 report your distributive share of the following contributions
for filing requirements. Don't file Form 8283 unless the (both cash and noncash) that may be subject to the 100%
total claimed deduction for all contributed items of AGI limitation.
property exceeds $500. Qualified conservation contributions of property
Food inventory contributions. The partnership will used in agriculture or livestock production. The
report on an attached statement your share of qualified partnership will report your share of qualified conservation
food inventory contributions. The food inventory contributions of property used in agriculture or livestock
contribution isn't included in the amount reported in production. This contribution isn't included in the amount
box 13 using code C. The partnership will also report your reported in box 13 using code C. If you're a farmer or
share of the partnership's net income from the business rancher, you qualify for a 100% AGI limitation for this
activities that made the food inventory contribution(s). contribution. Otherwise, your deduction for this
Your deduction for food inventory contributions made contribution is subject to a 50% AGI limitation. Report this
during 2023 can't exceed 15% of your aggregate net amount on Schedule A (Form 1040), line 12. See Pub.
income for the tax year from the business activities from 526 for more information on qualified conservation
which the food inventory contribution was made (including contributions.
your share of net income from partnership or S
Code H. Investment interest expense. Include this
corporation businesses that made food inventory
amount on Form 4952, line 1. If the partnership has
contributions). Amounts that exceed the 15% limitation
investment income or other investment expense, it'll report
may be carried over for up to 5 years. Report this amount,
your share of these items in box 20 using codes A and B.
subject to the 50% AGI limitation, on Schedule A (Form
Include investment income and expenses from other
1040), line 12.
sources to figure how much of your total investment
Noncash contributions You must fill out your own interest is deductible. You'll also need this information to
Form 8283 with the information the partnership provides figure your investment interest expense deduction.
you. If the partnership is the entity where the noncash
charitable contribution was originally reported, insert the If the partnership paid or accrued interest on debts
entity name and identifying number on your own Form properly allocable to investment property, the amount of
8283. See the Instructions for Form 8283 for more details. interest you're allowed to deduct may be limited.
If the partnership isn't the entity where the noncash For more information on the special provisions that
charitable contribution was originally reported, the apply to investment interest expense, see Form 4952 and
partnership will provide you the entity name and Pub. 550, Investment Income and Expenses.
identifying number that the noncash charitable Code I. Deductions—royalty income. Include
contribution was originally reported. Insert this information deductions allocable to royalties on Schedule E (Form
on your own Form 8283. 1040), line 19. For this type of expense, enter “From
Qualified conservation contributions. The Schedule K-1 (Form 1065).”
partnership will report your share of qualified conservation
contributions of property. In general, each partner’s claim These deductions aren't taken into account in figuring
of a charitable contribution deduction for a conservation your passive activity loss for the year. Don't enter them on
contribution is disallowed if the amount of the Form 8582.
partnership’s contribution of a qualified real property Code J. Section 59(e)(2) expenditures. On an
interest exceeds 2.5 times the sum of each partner’s attached statement, the partnership will show the type and
relevant basis in the partnership. See Qualified the amount of qualified expenditures for which you may
Conservation Contribution in Pub. 526 and Disallowance make a section 59(e) election. The statement will also
of conservation contribution deductions by certain identify the property for which the expenditures were paid
pass-through entities in the Instructions for Form 8283. or incurred. If there is more than one type of expenditure,
You must fill out your own Form 8283 and attach the Form the amount of each type will also be listed.
8283 the partnership provides you. See the Instructions If you deduct these expenditures in full in the current
for Form 8283 for more details. The partnership will year, they're treated as adjustments or tax preference
provide you your relevant basis. You must report this on items for purposes of alternative minimum tax (AMT).
your own Form 8283, line 3, column (h). The partnership However, you may elect to amortize these expenditures
may need information from you to calculate relevant basis. over the number of years in the applicable period rather

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than deducting the full amount in the current year. If you to use the excess amount on Form 8863 to figure the
make this election, these items aren't treated as education credits.
adjustments or tax preference items.
Code O. Dependent care benefits. The partnership will
Under the election, you can deduct circulation report the dependent care benefits you received. You
expenditures ratably over a 3-year period. Research and must use Form 2441, Part III, to figure the amount, if any,
experimental expenditures and mining exploration and of the benefits you may exclude from your income.
development costs can be amortized over a 10-year
period. Intangible drilling and development costs can be Code P. Preproductive period expenses. You may be
amortized over a 60-month period. The amortization able to deduct these expenses currently or you may need
period begins with the month in which such costs were to capitalize them under section 263A. See Pub. 225,
paid or incurred. Farmer's Tax Guide, and Regulations section 1.263A-4 for
details.
Make the election on Form 4562. If you make the
election, report the current year amortization of section Code Q. Reserved for future use.
59(e) expenditures from Form 4562, Part VI, on Code R. Pensions and IRAs. Payments made on your
Schedule E (Form 1040), line 28. If you don't make the behalf to an IRA, a qualified plan, a simplified employee
election, report the section 59(e)(2) expenditures on pension (SEP), or a SIMPLE IRA plan. See the
Schedule E (Form 1040), line 28, and figure the resulting instructions for Schedule 1 (Form 1040), line 20, to figure
adjustment or tax preference item (see Form 6251, your IRA deduction. Enter payments made to a qualified
Alternative Minimum Tax—Individuals). Whether you plan, SEP, or SIMPLE IRA plan on Schedule 1 (Form
deduct the expenditures or elect to amortize them, report 1040), line 16. If the payments to a qualified plan were to a
the amount on a separate line of Schedule E, line 28, defined benefit plan, the partnership should give you a
column (i), if you materially participated in the partnership statement showing the amount of the benefit accrued for
activity. If you didn't materially participate, follow the the current tax year.
Instructions for Form 8582 to figure how much of the
deduction can be reported in column (g) of Schedule E, Code S. Reforestation expense deduction. The
line 28. partnership will provide a statement that describes the
qualified timber property for these reforestation expenses.
Code K. Excess business interest expense (EBIE). If The expense deduction is limited to $10,000 ($5,000 if
the partnership reports EBIE to the partner, the partner is married filing separately) for each qualified timber
required to file Form 8990. See the Instructions for Form property, including your share of the partnership's
8990 for additional information. expense and any reforestation expenses you separately
For tax years beginning after 2017, the partner’s basis paid or incurred during the tax year.
in its partnership interest at the end of the tax year is If you didn't materially participate in the activity, use
reduced (but not below zero) by the amount of excess Form 8582 to figure the amount to report on Schedule E
business interest allocated to the partner for the tax year, (Form 1040), line 28, column (g). If you materially
even if the partner isn't allowed a deduction for the participated in the reforestation activity, report the
allocated excess business interest in the year of the basis deduction on Schedule E (Form 1040), line 28, column (i).
reduction. If the partner disposes of a partnership interest
in which the basis has been reduced before all of the Codes T through U. Reserved for future use.
allocated excess business interest was used, the partner Code V. Section 743(b) negative income adjust-
increases its basis immediately before the sale for the ments. The partnership will use this code to report the
amount not yet deducted. net negative income adjustment resulting from all section
Code L. Deductions—portfolio income (other). 743(b) basis adjustments. The partnership will provide
Generally, you should report these amounts on your section 743(b) adjustment net of cost recovery at
Schedule A (Form 1040), line 16. See the instructions for year end by asset grouping in box 20, code U.
Schedule A, line 16, for details. These deductions aren't Code W. Soil and water conservation. Soil and water
taken into account in figuring your passive activity loss for conservation expenditures and endangered species
the year. Don't enter them on Form 8582. recovery expenditures. See section 175 for limitations on
Code M. Amounts paid for medical insurance. Any the amount you're allowed to deduct.
amounts paid during the tax year for insurance that Code X. Film, television, and theatrical production
constitutes medical care for you, your spouse, your expenditures. The partnership will provide a statement
dependents, and your children under age 27 who aren't that describes the film, television, or live theatrical
dependents. On Schedule 1 (Form 1040), line 17, you production generating these expenses. Generally, if the
may be allowed to deduct such amounts, even if you don't aggregate cost of the production exceeds $15 million, you
itemize deductions. If you do itemize deductions, enter on aren't entitled to the deduction. The limitation is $20
Schedule A (Form 1040), line 1, any amounts not million for productions in certain areas (see section 181
deducted on Schedule 1 (Form 1040), line 17. for details). If you didn't materially participate in the
Code N. Educational assistance benefits. Deduct your activity, use Form 8582 to determine the amount that can
educational assistance benefits on a separate line of be reported on Schedule E (Form 1040), line 28, column
Schedule E (Form 1040), line 28, up to the $5,250 (g). If you materially participated in the production activity,
limitation. If your benefits exceed $5,250, you may be able report the deduction on Schedule E (Form 1040), line 28,
column (i).

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Code Y. Expenditures for removal of barriers.
Expenditures for the removal of architectural and Box 14. Self-Employment Earnings
transportation barriers to the elderly and disabled that the (Loss)
partnership elected to treat as a current expense. The
If you and your spouse are both partners, each of you
deductions are limited by section 190(c) to $15,000 per
must complete and file your own Schedule SE (Form
year from all sources.
1040), Self-Employment Tax, to report your partnership
Code Z. Itemized deductions. Itemized deductions that net earnings (loss) from self-employment.
Form 1040 or 1040-SR filers report on Schedule A (Form
Code A. Net earnings (loss) from self-employment. If
1040).
you're a general partner, reduce this amount before
Code AA. Contributions to a capital construction entering it on Schedule SE (Form 1040) by any section
fund (CCF). The deduction for a CCF investment isn't 179 expense deduction claimed, unreimbursed
taken on Schedule E (Form 1040). Instead, you subtract partnership expenses claimed, and depletion claimed on
the deduction from the amount that would normally be oil and gas properties. Don't reduce net earnings from
entered as taxable income on Form 1040 or 1040-SR, self-employment by any separately stated deduction for
line 15. In the margin to the left of line 15, enter "CCF" and health insurance expenses.
the amount of the deduction. If the amount on this line is a loss, enter only the
Code AB. Penalty on early withdrawal of savings. deductible amount on Schedule SE (Form 1040). See
Report this amount on Schedule 1 (Form 1040), line 18. Limitations on Losses, Deductions, and Credits, earlier.
Code AC. Interest expense allocated to debt-financed If your partnership is an options dealer or a
distributions. The manner in which you report such commodities dealer, see section 1402(i).
interest expense depends on your use of the distributed If your partnership is an investment club, see Rev. Rul.
debt proceeds. If the proceeds were used in a trade or 75-525, 1975-2 C.B. 350.
business activity, report the interest on Schedule E (Form Code B. Gross farming or fishing income. If you're an
1040), line 28. In column (a), enter the name of the individual partner, enter the amount from this line, as an
partnership and “interest expense.” If you materially item of information, on Schedule E (Form 1040), line 42.
participated in the trade or business activity, enter the Also use this amount to figure net earnings from
interest expense in column (i). If you didn't materially self-employment under the farm optional method on
participate in the activity, follow the Instructions for Form Schedule SE (Form 1040), Part II.
8582 to figure the interest expense you can report in
column (g). See the definition of material participation, Code C. Gross nonfarm income. If you're an individual
earlier. If the proceeds were used in an investment activity, partner, use this amount to figure net earnings from
report the interest on Form 4952. If the proceeds are used self-employment under the nonfarm optional method on
for personal purposes, the interest is generally not Schedule SE (Form 1040), Part II.
deductible.
Code AD. Interest expense on working interest in oil Box 15. Credits
or gas. Interest paid or accrued on debt properly If you have credits that are passive activity credits to you,
allocable to your share of a working interest in any oil or you must complete Form 8582-CR (or Form 8810 for
gas property (if your liability isn't limited). If you didn't corporations) in addition to the credit forms identified
materially participate in the oil or gas activity, this interest below. See Passive Activity Limitations, earlier, and the
is investment interest reportable as described earlier Instructions for Form 8582-CR (or Form 8810) for details.
under Code H; otherwise, it's trade or business interest. If Generally, you aren't required to complete the
you didn't materially participate in the oil or gas activity, TIP source credit form or attach it to Form 3800 if
this interest is investment interest expense and should be you're a taxpayer that isn't a partnership or S
reported on Form 4952. If you materially participated in corporation, and your only source for a credit listed on
the activity, report the interest on Schedule E (Form 1040), Form 3800, Part III, is from a partnership, S corporation,
line 28. On a separate line, enter “interest expense” and estate, trust, or cooperative. (Instead, you can report this
the name of the partnership in column (a) and the amount credit directly on Form 3800, Part III, and enter the EIN of
in column (i). the partnership in column (d) of Part III.) The following
Code AE. Deductions—portfolio income. Formerly exceptions apply.
deductible by individuals under section 67 subject to the You're claiming the investment credit (Form 3468) or the
•
2% AGI floor. For taxpayers other than individuals, deduct biodiesel, renewable diesel, or sustainable aviation fuels
amounts that are clearly and directly allocable to portfolio credit (Form 8864).
income (other than investment interest expense and The taxpayer is an estate or trust and the source credit
•
section 212 expenses from a REMIC). can be allocated to beneficiaries. For more details, see the
The partnership will give you a description and the instructions for box 13 of Schedule K-1 (Form 1041),
amount of your share for each of these items. Beneficiary’s Share of Income, Deductions, Credits, etc.
Codes AF through AJ. Reserved for future use. • The taxpayer is a cooperative and the source credit can
or must be allocated to patrons. For more details, see the
Code ZZ. Other. Any other information you may need to instructions for Form 1120-C, U.S. Income Tax Return for
file your tax return. Cooperative Associations, Schedule J, line 5c.

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Code A. Zero-emission nuclear power production RIC or REIT. Report these taxes on Schedule 3 (Form
credit. Report this amount on Form 7213, Part II; or Form 1040), line 13a.
3800, Part III, line 1u. Code I. Biofuel producer credit. Report this amount on
Code B. Production from advanced nuclear power fa- Form 6478, Biofuel Producer Credit, line 3; or Form 3800,
cilities credit. Report this amount on Form 7213, Part I; Part III, line 4c (see TIP, earlier).
or Form 3800, Part III, line 1cc. Code J. Work opportunity credit. Report this amount
Codes C and D. Low-income housing credit. If on Form 5884, Work Opportunity Credit, line 3; or Form
section 42(j)(5) applies, the partnership will report your 3800, Part III, line 4b (see TIP, earlier).
share of the low-income housing credit using code C. If Code K. Disabled access credit. Report this amount
section 42(j)(5) doesn't apply, your share of the credit will on Form 8826, Disabled Access Credit, line 7; or Form
be reported using code D. Any allowable low-income 3800, Part III, line 1e (see TIP, earlier).
housing credit reported using code C or D is reported on
Form 8586, line 4; or Form 3800, Part III, line 4d. Code L. Empowerment zone employment credit.
Report this amount on Form 8844, Empowerment Zone
Keep a separate record of the low-income housing Employment Credit, line 3; or Form 3800, Part III, line 3
credit from each separate source so that you can correctly (see TIP, earlier).
figure any recapture of low-income housing credit that
may result from the disposition of all or part of your Code M. Credit for increasing research activities.
partnership interest. For more information on recapture, Report this amount on Form 6765, Credit for Increasing
see the instructions for Form 8611, Recapture of Research Activities, line 37; or on Form 3800, Part III (see
Low-Income Housing Credit. TIP, earlier) as follows.
• The partnership will provide information necessary to
Code E. Qualified rehabilitation expenditures (rental determine if it's an eligible small business under section
real estate). The partnership will report your share of the 38(c)(5)(A). If you and the partnership are eligible small
qualified rehabilitation expenditures and other information businesses, report the credit on line 4i. For more
you need to complete Form 3468 related to rental real information, see the Instructions for Form 3800.
estate activities using code E. Your share of qualified • All others, report the credit on line 1c.
rehabilitation expenditures from property not related to
rental real estate activities will be reported in box 20 using Code N. Credit for employer social security and Med-
code D. See the Instructions for Form 3468 for details. If icare taxes. Report this amount on Form 8846, Credit for
the partnership is reporting expenditures from more than Employer Social Security and Medicare Taxes Paid on
one activity, the attached statement will separately identify Certain Employee Tips, line 5; or Form 3800, Part III,
the expenditures from each activity. line 4f (see TIP, earlier).
Combine the expenditures (for Form 3468 reporting) Code O. Backup withholding. This is your share of the
from box 15, code E, and box 20, code D. The credit for backup withholding on dividends, interest
expenditures related to rental real estate activities (box 15, income, and other types of income. Include this amount in
code E) are reported on Schedule K-1 separately from the total you enter on Form 1040 or 1040-SR, line 25c,
other qualified rehabilitation expenditures (box 20, code and attach a copy of the Schedule K-1 to your tax return.
D) because they're subject to different passive activity Instead of attaching a copy of the Schedule K-1 to the tax
limitation rules. See the Instructions for Form 8582-CR for return, you can include a statement with the return that
details. provides the partnership's name, address, EIN, and
backup withholding amount.
Code F. Other rental real estate credits. The
partnership will identify the type of credit and any other Other credits. Most credits identified by codes P through
information you need to figure these credits from rental ZZ will be reported on Form 3800 (see TIP, earlier).
real estate activities (other than the low-income housing Code P. Unused investment credit from the qualifying
credit and qualified rehabilitation expenditures). These advanced coal project credit or qualifying gasifica-
credits may be limited by the passive activity limitations. If tion project credit allocated from cooperatives.
the credits are from more than one activity, the partnership Report this amount on Form 3468, Part II, line 6.
will identify the credits from each activity on an attached
statement. See Passive Activity Limitations, earlier, and Code Q. Unused investment credit from the qualify-
the Instructions for Form 8582-CR for details. ing advanced energy project credit allocated from
cooperatives. Report this amount on Form 3468, Part III,
Code G. Other rental credits. The partnership will line 2.
identify the type of credit and any other information you
need to figure these rental credits. These credits may be Code R. Unused investment credit from the ad-
limited by the passive activity limitations. If the credits are vanced manufacturing investment credit allocated
from more than one activity, the partnership will identify from cooperatives. Report this amount on Form 3468,
the credits from each activity on an attached statement. Part IV, line 2.
See Passive Activity Limitations, earlier, and the Code S. Reserved for future use.
Instructions for Form 8582-CR for details.
Code T. Unused investment credit from the energy
Code H. Undistributed capital gains credit. Code H credit allocated from cooperatives. Report this amount
represents taxes paid on undistributed capital gains by a on Form 3468, Part VI, line 31.

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Code U. Unused investment credit from the rehabili- Code AP. Clean renewable energy bond credit.
tation credit allocated from cooperatives. Report this Report this amount on Form 8912.
amount on Form 3468, Part VII, line 2.
Code AQ. New clean renewable energy bond credit.
Code V. Advanced manufacturing production credit. Report this amount on Form 8912.
Report this amount on Form 7207; or Form 3800, Part III,
Code AR. Qualified energy conservation bond credit.
line 1b.
Report this amount on Form 8912.
Codes W and X. Reserved for future use.
Code AS. Qualified zone academy bond credit.
Code Y. Clean hydrogen production credit. Report Report this amount on Form 8912.
this amount on Form 7210; or Form 3800, Part III, line 1g.
Code AT. Qualified school construction bond credit.
Code Z. Orphan drug credit. Report this amount on Report this amount on Form 8912.
Form 8820; or Form 3800, Part III, line 1h.
Code AU. Build America bond credit. Report this
Code AA. Enhanced oil recovery credit. Report this amount on Form 8912.
amount on Form 8830; or Form 3800, Part III, line 1t.
Code AV. Credit for employer differential wage pay-
Code AB. Renewable electricity production credit. ments. Report this amount on Form 8932; or Form 3800,
Report this amount on Form 8835, Part II; or Form 3800, Part III, line 1w.
Part III, line 1f.
Code AW. Carbon oxide sequestration credit. Report
Code AC. Biodiesel, renewable diesel, or sustainable this amount on Form 8933, Part III, Section D, line 20; or
aviation fuels credit. If this credit includes the small Form 3800, Part III, line 1x.
agri-biodiesel producer credit, the partnership will provide
Code AX. Carbon oxide sequestration credit recap-
additional information on an attached statement. If no
ture. Report this amount on Form 8933, Part III,
statement is attached, report this amount on Form 8864,
Section D, line 22.
line 10. If a statement is attached, see the instructions for
Form 8864, line 10. Code AY. New clean vehicle credit. Report this amount
on Form 8936, Part II; or Form 3800, Part III, line 1y.
Code AD. New markets credit. Report this amount on
Form 8874; or Form 3800, Part III, line 1i. Code AZ. Qualified commercial clean vehicle credit.
Report this amount on Form 8936, Part V; or Form 3800,
Code AE. Credit for small employer pension plan
Part III, line 1aa.
startup costs. Report this amount on Form 8881, Part I;
or Form 3800, Part III, line 1j. Code BA. Credit for small employer health insurance
premiums. Report this amount on Form 8941; or Form
Code AF. Credit for small employer auto-enrollment.
3800, Part III, line 4h.
Report this amount on Form 8881, Part II; or Form 3800,
Part III, line 1dd. Code BB. Employer credit for paid family and medi-
cal leave. Report this amount on Form 8944; or Form
Code AG. Credit for small employer military spouse
3800, Part III, line 4j.
retirement plan eligibility. Report this amount on Form
8881, Part III; or Form 3800, Part III, line 1ee. Code BC. Eligible credits from transferor(s) under
section 6418. Report this amount on Form 3800. See the
Code AH. Credit for employer-provided childcare fa-
instructions for Form 3800, Parts III and V, for additional
cilities and services. Report this amount on Form 8882;
information.
or Form 3800, Part III, line 1k.
Codes BD through BG. Reserved for future use.
Code AI. Low sulfur diesel fuel production credit.
Report this amount on Form 8896; or Form 3800, Part III, Code ZZ. Other. Any other information you may need to
line 1m. file your tax return.
Code AJ. Qualified railroad track maintenance credit.
Report this amount on Form 8900; or Form 3800, Part III, Box 16. International Transactions
line 4g. If the partnership checked the box, see the attached
Code AK. Credit for oil and gas production from mar- Schedule K-3 with respect to items of international tax
ginal wells. Report this amount on Form 8904; or Form relevance.
3800, Part III, line 1bb. If the partnership didn't check the box, the partnership
Code AL. Distilled spirits credit. Report this amount on attached a statement to the Schedule K-1 (or issued a
Form 8906; or Form 3800, Part III, line 1n. statement prior to furnishing the Schedule K-1) notifying
the partner that the partner won't receive Schedule K-3
Code AM. Energy efficient home credit. Report this from the partnership unless the partner requests the
amount on Form 8908; or Form 3800, Part III, line 1p. schedule.
Code AN. Alternative motor vehicle credit. Report this For additional information, see the Partner’s
amount on Form 8910; or Form 3800, Part III, line 1r. Instructions for Schedule K-3.
Code AO. Alternative fuel vehicle refueling property
credit. Report this amount on Form 8911, Part II; or Form
3800, Part III, line 1s.

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Box 17. Alternative Minimum Tax Box 19. Distributions
(AMT) Items Code A. Cash and marketable securities. Code A
Use the information reported in box 17 (as well as your shows the distributions the partnership made to you of
adjustments and tax preference items from other sources) cash and certain marketable securities. The marketable
to prepare your Form 6251; or Schedule I (Form 1041), securities are included at their FMVs on the date of
Alternative Minimum Tax—Estates and Trusts. distribution (minus your share of the partnership's gain on
the securities distributed to you). If the amount shown as
Code A. Post-1986 depreciation adjustment. This code A exceeds the adjusted basis of your partnership
amount is your share of the partnership's post-1986 interest immediately before the distribution, the excess is
depreciation adjustment. If you're an individual partner, treated as gain from the sale or exchange of your
report this amount on Form 6251, line 2l. partnership interest. Generally, this gain is treated as gain
Code B. Adjusted gain or loss. This amount is your from the sale of a capital asset and should be reported on
share of the partnership's adjusted gain or loss. If you're Form 8949 and the Schedule D for your return. However, if
an individual partner, report this amount on Form 6251, you receive cash or property in exchange for any part of a
line 2k. partnership interest, the amount of the distribution
attributable to your share of the partnership's unrealized
Code C. Depletion (other than oil & gas). This amount
receivable or inventory items results in ordinary income
is your share of the partnership's depletion adjustment. If
(see Regulations section 1.751-1(a) and Sale or
you're an individual partner, report this amount on Form
Exchange of Partnership Interest, earlier). For details, see
6251, line 2d.
Form 8308.
Codes D and E. Oil, gas, & geothermal proper- The partnership will separately identify both of the
ties—gross income and deductions. The amounts following.
reported on these lines include only the gross income • The FMVs of the marketable securities when distributed
(code D) from, and deductions (code E) allocable to, oil, (minus your share of the gain on the securities distributed
gas, and geothermal properties included in box 1 of to you).
Schedule K-1. The partnership should have attached a • The partnership's adjusted basis of those securities
statement that shows any income from or deductions immediately before the distribution.
allocable to such properties that are included in boxes 2
through 13, 18, and 20 of Schedule K-1. Use the amounts Decrease the adjusted basis of your interest in the
reported and the amounts on the attached statement to partnership (but not below zero) by the amount of cash
help you figure the net amount to enter on Form 6251, distributed to you and the partnership's adjusted basis of
line 2t. the distributed securities. Advances or drawings of money
or property against your share are treated as current
Code F. Other AMT items. Enter the information on the distributions made on the last day of the partnership's tax
statement attached by the partnership on the applicable year.
lines of Form 6251, Form 466, or Schedule I (Form 1041). Your basis in the distributed marketable securities
(other than in liquidation of your interest) is the smaller of:
Box 18. Tax-Exempt Income and • The partnership's adjusted basis in the securities
immediately before the distribution increased by any gain
Nondeductible Expenses
recognized on the distribution of the securities, or
Code A. Tax-exempt interest income. Report on your • The adjusted basis of your partnership interest reduced
return, as an item of information, your share of the by any cash distributed in the same transaction and
tax-exempt interest received or accrued by the partnership increased by any gain recognized on the distribution of the
during the year. Individual partners include this amount on securities.
Form 1040 or 1040-SR, line 2a. Increase the adjusted If you received the securities in liquidation of your
basis of your interest in the partnership by this amount. partnership interest, your basis in the marketable
Code B. Other tax-exempt income. Increase the securities is equal to the adjusted basis of your
adjusted basis of your interest in the partnership by the partnership interest reduced by any cash distributed in the
amount shown, but don't include it in income on your tax same transaction and increased by any gain recognized
return. on the distribution of the securities.
The partnership will attach a statement for the Code B. Distribution subject to section 737. If a
TIP amount included under code B that's exempt by partner contributed section 704(c) built-in gain property
reason of section 892 and describe the nature of within the last 7 years and the partnership made a
the income. distribution of property to that partner other than the
previously contributed built-in gain property, the partner
Code C. Nondeductible expenses. The nondeductible may be required to recognize gain under section 737. This
expenses paid or incurred by the partnership aren't gain is in addition to any gain recognized under section
deductible on your tax return. Decrease the adjusted 731 on the distribution.
basis of your interest in the partnership by this amount. When this occurs, the partnership will enter code B in
box 19 of the contributing partner's Schedule K-1 and
attach a statement that provides the information the

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partner needs to figure the recognized gain under section partnership had in the property immediately before the
737. The partnership is required to provide the following distribution as a result of section 732(a)(2).
information. Section 732(b) basis adjustment. If the basis of
• The FMV of the distributed property (other than money). distributed property in a liquidating distribution is different
• The amount of money received in the distribution. to the recipient partner from the basis the partnership had
• The net precontribution gain of the partner. in the property immediately before the distribution as a
Using the information from the attached statement, result of section 732(b).
complete the worksheet below to figure your recognized The statement must include the following information.
gain under section 737. • The name and EIN of the partnership from which a
distribution was received.
Computation of Section 737 Gain • The computation of the adjustment to the basis of the
1. Enter the FMV of the distributed property distributed property or properties.
(other than money) . . . . . . . . . . . . . . $ The allocation of the basis adjustment to the distributed
•
2. Enter your adjusted basis in the partnership properties in the hands of the partner.
immediately before the distribution. See Basis
Limitations, earlier . . . . . . . . . . . . . . .
3. Enter the amount of money received in the Box 20. Other Information
distribution . . . . . . . . . . . . . . . . . . .
4. Subtract line 3 from line 2. If zero or less, Code A. Investment income. Report this amount on
enter -0- . . . . . . . . . . . . . . . . . . . . . Form 4952, line 4a.
5. Subtract line 4 from line 1 . . . . . . . . . . Code B. Investment expenses. Report this amount on
Form 4952, line 5.
6. Enter your net precontribution gain . . . .
Code C. Fuel tax credit information. The partnership
7. Section 737 gain. Enter the lesser of the will report the number of gallons of each fuel sold or used
amount on line 5 or line 6 . . . . . . . . . .
during the tax year for a nontaxable use qualifying for the
credit for taxes paid on fuels, type of use, and the
applicable credit per gallon. Use this information to
The type of gain (section 1231 gain, capital gain) complete Form 4136, Credit for Federal Tax Paid on Fuels.
generated is determined by the type of gain you would
have recognized if you sold the property rather than Code D. Qualified rehabilitation expenditures (other
contributing it to the partnership. Accordingly, report the than rental real estate). The partnership will report your
amount from line 7, above, on Form 4797 or Form 8949 share of qualified rehabilitation expenditures and other
and the Schedule D of your tax return. information you need to complete Form 3468 for property
not related to rental real estate activities in box 20 using
Code C. Other property. Code C shows the code D. Your share of qualified rehabilitation expenditures
partnership's adjusted basis of property other than money related to rental real estate activities is reported in box 15
immediately before the property was distributed to you. In using code E. See the Instructions for Form 3468 for
addition, the partnership should report the adjusted basis details. If the partnership is reporting expenditures from
and FMV of each property distributed. Decrease the more than one activity, the attached statement will
adjusted basis of your interest in the partnership by the separately identify the expenditures from each activity.
amount of your basis in the distributed property. Your
basis in the distributed property (other than in liquidation Combine the expenditures (for Form 3468 reporting)
of your interest) is the smaller of: from box 15, code E, and box 20, code D. The
• The partnership's adjusted basis immediately before expenditures related to rental real estate activities (box 15,
the distribution, or code E) are reported on Schedule K-1 separately from
• The adjusted basis of your partnership interest reduced other qualified rehabilitation expenditures (box 20, code
by any cash distributed in the same transaction. D) because they're subject to different passive activity
limitation rules. See the Instructions for Form 8582-CR for
If you received the property in liquidation of your details.
interest, your basis in the distributed property is equal to
the adjusted basis of your partnership interest reduced by Code E. Basis of energy property. If the partnership
any cash distributed in the same transaction. provides an attached statement for code E, use the
If you receive cash or property in exchange for any part information on the statement to complete the applicable
of a partnership interest, the amount of the distribution energy credit on Form 3468, Part VI. See Part VI—Energy
attributable to your share of the partnership's unrealized Credit Under Section 48 in the Instructions for Form 3468.
receivable or inventory items results in ordinary income Codes F and G. Recapture of low-income housing
(see Regulations section 1.751-1(a) and Sale or credit. A section 42(j)(5) partnership will report recapture
Exchange of Partnership Interest, earlier). of a low-income housing credit with code F. All other
A partner must attach a statement to their return for the partnerships will report recapture of a low-income housing
tax year of the distribution if either of the following credit with code G. Keep a separate record of recapture
situations is applicable. from each of these sources so that you'll be able to
Section 732(a)(2) basis adjustment. If the basis of correctly figure any recapture of low-income housing
distributed property in a non-liquidating distribution is credit that may result from the disposition of all or part of
different to the recipient partner from the basis the your partnership interest. For details, see Form 8611.

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Code H. Recapture of investment credit. The Form 4797, line 22, add to the amount from item 6, above,
partnership will provide any information you need to figure the amount of your share of the section 179 expense
your recapture tax on Form 4255, Recapture of Investment deduction, reduced by any unused carryover of the
Credit. See the Form 3468 on which you took the original deduction for this property. This amount may be different
credit for other information you need to complete Form from the amount of section 179 expense you deducted for
4255. the property if your interest in the partnership has
changed.
You may also need Form 4255 if you disposed of more
than one-third of your interest in a partnership. 8. If the disposition is due to a casualty or theft, a
statement providing the information you need to complete
Code I. Recapture of other credits. On a statement Form 4684.
attached to Schedule K-1, the partnership will report any
9. If the sale was an installment sale, any information
information you need to figure the recapture of the new
you need to complete Form 6252, Installment Sale
markets credit (see Form 8874; and Form 8874-B, Notice
Income. The partnership will separately report your share
of Recapture Event for New Markets Credit); any credit for
of all payments received for the property in future tax
employer-provided childcare facilities and services (see
years. See the Form 6252 instructions for details.
Form 8882); the alternative motor vehicle credit (see
section 30B(h)(8)); the alternative fuel vehicle refueling Code M. Recapture of section 179 deduction. The
property credit (see section 30C(e)(5)); or the new partnership will report your share of any recapture of the
qualified plug-in electric drive motor vehicle credit (see section 179 expense deduction if business use of any
section 30D(f)(5)). property for which the section 179 expense deduction was
Code J. Look-back interest—completed long-term passed through to partners dropped to 50% or less. If this
contracts. The partnership will report any information occurs, the partnership must provide the following
you need to figure the interest due or to be refunded under information.
the look-back method of section 460(b)(2) on certain • Your share of the depreciation allowed or allowable (not
long-term contracts. Use Form 8697, Interest Computation including the section 179 expense deduction).
Under the Look-Back Method for Completed Long-Term • Your share of the section 179 expense deduction (if
Contracts, to report any such interest. any) passed through for the property and the partnership's
tax year(s) in which the amount was passed through.
Code K. Look-back interest—income forecast meth-
Reduce this amount by the portion, if any, of your unused
od. The partnership will report any information you need
(carryover) section 179 expense deduction for this
to figure the interest due or to be refunded under the
property.
look-back method of section 167(g)(2) for certain property
placed in service after September 13, 1995, and Code N. Business interest expense (BIE). For tax
depreciated under the income forecast method. Use Form years beginning after November 12, 2020, the partnership
8866, Interest Computation Under the Look-Back Method will report your share of the partnership's deductible BIE
for Property Depreciated Under the Income Forecast for inclusion in the separate loss class for computing any
Method, to report any such interest. basis limitation (defined in section 704(d) and Regulations
section 1.163(j)-6(h)). This information is necessary if your
Code L. Dispositions of property with section 179 de-
losses are limited under section 704(d). Deductible BIE is
ductions. The partnership will report your share of gain
reported elsewhere on Schedule K-1 and the total amount
or loss on the sale, exchange, or other disposition of
is reported here for information only and was already
property for which a section 179 expense deduction was
included as a deduction on another line of your
passed through to partners with code L. If the partnership
Schedule K-1. Included in the code N information is a
passed through a section 179 expense deduction for the
statement providing the allocation of the BIE already
property, you must report the gain or loss and any
deducted by the partnership by line number on
recapture of the section 179 expense deduction for the
Schedule K-1.
property on your income tax return (see the Instructions
for Form 4797 for details). The partnership will provide all The partner must remove the BIE deductions from
the following information. ! these referenced lines when computing any basis
1. Description of the property. CAUTION limitation.

2. Date the property was acquired and placed in Any EBIE not deductible under section 163(j) will be
service. included in box 13, code K, for inclusion in the basis
3. Date of the sale or other disposition of the property. limitation and isn't reported here. See Worksheet for
Adjusting the Basis of a Partner’s Interest in the
4. Your share of the gross sales price or amount
Partnership for additional information about computing the
realized.
loss limitation.
5. Your share of the cost or other basis plus the
expense of sale. Code O. Section 453(l)(3) information. The
partnership will report any information you need to figure
6. Your share of the depreciation allowed or allowable.
the interest due under section 453(l)(3) with respect to the
7. Your share of the section 179 expense deduction (if disposition of certain timeshares and residential lots on
any) passed through for the property and the partnership's the installment method. If you're an individual, report the
tax year(s) in which the amount was passed through. To interest on Schedule 2 (Form 1040), line 14.
figure the amount of depreciation allowed or allowable for

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Code P. Section 453A(c) information. The partnership of production for the tax year, and other information
will report any information you need to figure the interest needed to figure your depletion deduction for oil and gas
due under section 453A(c) with respect to certain wells. The partnership should also allocate to you a share
installment sales. See Pub. 537, Installment Sales, for of the adjusted basis of each partnership oil or gas
more information on section 453A(c). The information will property. See the 2022 Pub. 535 for details on how to
include the following from each Form 6252 where line 5 is figure your depletion deduction.
greater than $150,000. Code U. Section 743(b) basis adjustment. The
• Description of property. partnership will provide your section 743(b) adjustment,
• Date acquired. net of cost recovery, by asset grouping. Go to IRS.gov/
• Date property sold. forms-pubs/clarifications-for-disregarded-entity-reporting-
• Selling price, including mortgages and other debts (not and-section-743b-reporting for more information.
including interest, whether stated or unstated). Code V. Unrelated business taxable income. The
• Mortgages, debts, and other liabilities the buyer partnership will report any information you need to figure
assumed or took the property subject to. unrelated business taxable income under section 512(a)
• Gross profit. (1) (but excluding any modifications required by
• Contract price. paragraphs (8) through (15) of section 512(b)) for a
• Gross profit percentage. partner that's a tax-exempt organization.
• Current year payments and deemed payments received
during the year, not including interest, whether stated or A partner is required to notify the partnership of its
unstated. TIP tax-exempt status.
• Origination year payments and deemed payments
received during the year, not including interest whether Code W. Precontribution gain (loss). If the partnership
stated or unstated. distributed any property with precontribution gain or loss
• Prior year payments, not including interest whether to any partner other than the contributing partner, and the
stated or unstated. date of the distribution was within 7 years of the date the
• Installment sale income. property was contributed to the partnership, the
• Character of the income—capital or ordinary. contributing partner must recognize a gain or loss under
See section 453A(c) for information on how to compute section 704(c)(1)(B). If the partnership made such a
the interest charge on the deferred tax liability. The section distribution during its tax year, it'll enter code W in box 20
453A interest charge is reported as additional or other on of the contributing partner's Schedule K-1 and attach a
other tax returns. See Interest on Deferred Tax in Pub. 537 statement providing the amount of the partner's
for additional details on how to compute the section precontribution gain (loss) and identifying the character of
453A(c) interest. the gain or loss (for example, capital gain (loss) or section
Code Q. Section 1260(b) information. The partnership 1231 gain (loss)). Report the precontribution gain or loss
will report any information you need to figure the interest on Form 8949 and/or Schedule D (Form 1040) or Form
due under section 1260(b). If the partnership had gain 4797 in accordance with the information provided by the
from certain constructive ownership transactions, your tax partnership.
liability must be increased by the interest charge on any Code X. Payment obligations including guarantees
deferral of gain recognition under section 1260(b). Report and deficit obligations (DROs). If a partnership has
the interest on Schedule 2 (Form 1040), line 17z. Enter checked the box in item K3, this indicates that you or a
“1260(b)” and the amount of the interest in the space to person related to you has a payment obligation with
the left of line 17z. See section 1260(b) for details, respect to the partnership's liabilities. The attached
including how to figure the interest. statement for box 20, code X, reflects the ending balance
Code R. Interest allocable to production expendi- of each payment obligation that was included in the
tures. The partnership will report any information you aggregate amount reported in box 20 under code X. For
need relating to interest you're required to capitalize under purposes of box 20, code X, a payment obligation is
section 263A for production expenditures. See defined as an obligation under Regulations section
Regulations sections 1.263A-8 through -15 for details. 1.752-2(b)(1) that is recognized under Regulations
sections 1.752-2(b)(3)(i)(A) and (B) (such as a recognized
Code S. Capital construction fund (CCF) nonqualified guarantee or an obligation to restore a deficit capital
withdrawals. The partnership will report your share of account upon liquidation) and a related person is defined
nonqualified withdrawals from a CCF. These withdrawals as a related person as defined in Regulations section
are taxed separately from your other gross income at the 1.752-4(b).
highest marginal ordinary income or capital gains tax rate.
Attach a statement to your federal income tax return to Code Y. Net investment income (NII). The partnership
show your computation of both the tax and interest for a may use this code Y to report information you may need to
nonqualified withdrawal. Include the tax and interest on determine your NIIT under section 1411 that isn't reported
Schedule 2 (Form 1040), line 17z. In the space to the left elsewhere on the Schedule K-1 or K-3. Code Y is used to
of line 17z, enter the amount of tax and interest and “CCF.” report information not provided elsewhere on
See Pub. 595 for details. Schedule K-3 (or an attachment) regarding income from
CFCs and passive foreign investment companies (PFICs)
Code T. Depletion information—oil and gas. This is the stock of which is owned by the partnership. For CFCs
your share of gross income from the property, your share and PFICs that you treat as qualified electing funds

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(QEFs), the information that's relevant to you will depend reflect your distributive share of the partnership’s UBIA of
on whether you, the partnership, or a lower-tier entity has qualified property of each qualified trade, business, or
made an election under Regulations section 1.1411-10(g) aggregation. See the instructions for Form 8995 or
with respect to the CFC or QEF. For example, if the 8995-A, as applicable.
partnership made an election under Regulations section Section 199A dividends. The amount reported
1.1411-10(g) for a CFC the stock of which is owned by the reflects your distributive share of the partnership's net
partnership, and the relevant income and deduction items section 199A dividends. See the instructions for Form
derived from that CFC are reported elsewhere on the 8995 or 8995-A, as applicable.
Schedule K-3, then you won't need the information Patrons of specified agricultural and horticultural
provided in code Y to complete your Form 8960. cooperatives. If the partnership was a patron of an
If you're an individual who is a U.S. citizen or resident, agricultural or horticultural cooperative (specified
or a domestic trust or estate, follow the Instructions for cooperative), you must use Form 8995-A to figure your
Form 8960 to figure and report your NII and AGI or MAGI. QBI deduction. You must also complete Schedule D (Form
Corporate partners aren't subject to the NIIT. See 8995-A), Special Rules for Patrons of Agricultural or
Regulations sections 1.1411-1 through -10 for details. Horticultural Cooperatives, to determine your patron
reduction.
Code Z. Section 199A information. Generally, you may
QBI items allocable to qualified payments from
be allowed a deduction of up to 20% of your net qualified
specified cooperatives subject to partner-specific
business income (QBI) plus 20% of your qualified REIT
determinations. The amounts reported to you reflect
dividends, also known as section 199A dividends, and
your distributive share of items from the partnership’s
qualified PTP income from your partnership. The
trade(s), business(es), or aggregation(s), and include
partnership will provide the information you need to figure
items that may not be includible in your calculation of the
your deduction. Use one of these forms to figure your QBI
QBI deduction and patron reduction. When determining
deduction.
QBI items allocable to qualified payments, you must
1. Use Form 8995, Qualified Business Income include only qualified items that are included or allowed in
Deduction Simplified Computation, if all of the following determining taxable income for the tax year. To determine
apply. your QBI items allocable to qualified payments, see the
a. You have QBI, section 199A dividends, or PTP Instructions for Form 8995-A.
income (defined below). W-2 wages allocable to qualified payments from
b. Your 2023 taxable income before the QBI deduction specified cooperatives. The amounts reported reflect
is equal to or less than $182,100 ($364,200 if married your distributive share of the partnership's W-2 wages
filing jointly). allocable to the qualified payments of each qualified trade,
c. You aren’t a patron in a specified agricultural or business, or aggregation. See the Instructions for Form
horticultural cooperative. 8995-A.
Section 199A(g) deduction from specified
2. Use Form 8995-A, Qualified Business Income cooperatives. The amount reported reflects your
Deduction, if you don't meet all three of the above distributive share of the partnership’s net section 199A(g)
requirements. deduction. See the Instructions for Form 8995-A.
Use the information provided by your partnership to Code AA. Section 704(c) information. The partnership
complete the appropriate form listed above. For definitions will show the portion of income or deduction items
and more information, see the instructions for Form 8995 allocated to you under section 704(c). These items are
or 8995-A, as appropriate. included elsewhere in other income or deduction items on
QBI/qualified PTP items subject to partner-specific Schedule K-1.
determinations. The amounts reported to you reflect
your distributive share of items from the partnership’s Code AB. Section 751 gain (loss). This code is used to
trade(s), business(es), or aggregation(s), and may include report the partner's share of gain or loss on the sale of the
items that aren't includible in your calculation of the QBI partnership interest subject to taxation at ordinary income
deduction. When determining QBI or qualified PTP tax rates.
income, you must include only those items that are Information reported for codes AB, AC, and AD may
qualified items of income, gain, deduction, and loss also have been reported to you on Form 8308. In addition,
included or allowed in determining taxable income for the for foreign transferors, the information for code AB must
tax year. To determine your QBI or your qualified PTP also have been reported to you on Schedule K-3, Part XIII.
income amounts and for information on where to report See the Partner’s Instructions for Schedule K-3 (Form
them, see the instructions for Form 8995 or 8995-A, as 1065). Even if this information is required to be reported
appropriate. on multiple forms, it must only be reported on the partner’s
W-2 wages. The amounts reported reflect your tax return once.
distributive share of the partnership’s W-2 wages allocable Code AC. Section 1(h)(5) gain. This code is used to
to the QBI of each qualified trade, business, or report the partner’s share of gain or loss on the sale of the
aggregation. See the instructions for Form 8995 or partnership interest subject to taxation at the rate for
8995-A, as appropriate. collectible assets as defined in section 1(h)(5).
Unadjusted basis immediately after acquisition
(UBIA) of qualified property. The amounts reported Code AD. Deemed section 1250 unrecaptured gain.
This code is used to report the partner’s share of gain or

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loss on the sale of the partnership interest subject to share of the aggregate gross income or gain, and
taxation at the rate for unrecaptured section 1250 gain aggregate deductions, from the business activity of all of
assets as defined in section 1(h)(6). the partnership's trades or businesses. You can use this to
figure any excess business loss limitation that may apply.
Code AE. Excess taxable income. If the partnership
See section 461(l) and Form 461 and its instructions for
was required to file Form 8990, it may determine it has
details.
excess taxable income. Report the amount of excess
taxable income on Form 8990, Schedule A, line 43, Code AK. Gain from mark-to-market election. If a
column (f), if you're required to file Form 8990. See the partnership is a trader in securities, commodities, or both,
Instructions for Form 8990 for additional information. and has properly elected under section 475(f) to mark to
market the securities, the commodities, or both, the
Code AF. Excess business interest income (EBIE). If
partnership reports ordinary gain or loss from the
the partnership is required to file Form 8990, it may
securities or commodities (or both securities and
determine it has EBIE. Enter the amount of EBIE on Form
commodities) trading activities separately from any other
8990, Schedule A, line 43, column (g), if you're required to
ordinary gain or loss.
file Form 8990. See the Instructions for Form 8990 for
additional information. Code AL. Section 721(c) partnership. If the
partnership is a section 721(c) partnership, the
Code AG. Gross receipts for section 448(c).
partnership should include the amounts relating to any
Regulations section 1.163(j)-2(d)(2)(iii) requires that
remedial items made under the remedial allocation
partners in a partnership include a share of partnership
method (described in Regulations sections 1.704-3(d) and
gross receipts in proportion to their share of gross income
1.704-3(d)(5)(iii)) with respect to section 721(c) property
under section 703 (unless the partnership is treated as
allocable to each partner. The partnership will include a
one person under the aggregation rules of section 448(c)).
separate code AL for the total remedial income, if any,
Partnerships with current year gross receipts (defined in
allocated to the U.S. transferor; total gain recognized due
Regulations section 1.448-1T(f)(2)(iv)) greater than $5
to an acceleration event; or total gain recognized due to a
million are required to report to their partners their
section 367 transfer reflected on Schedule G (Form 8865),
distributive shares of current year gross receipts, as well
Part II, columns (c), (d), and (e), respectively. Only the
as their distributive shares of gross receipts for the 3
amount of the total remedial income allocated to the U.S.
immediately preceding tax years. If a partnership and a
transferor will be included in box 1 of Schedule K-1, Part
partner are treated as a single employer under the section
III. Any recognized gain due to an acceleration event or
448(c) aggregation rules, and the partnership has current
section 367 transfer must be separately reported by the
year gross receipts greater than $5 million, then the
U.S. transferor on its own federal income tax return. For all
partnership should also report its total current year gross
other partners of the section 721(c) partnership, a
receipts, as well as its total gross receipts for the 3
separate code AL is used to provide the remedial items
immediately preceding tax years, to that partner. See
allocated to that partner relating to section 721(c) property
IRS.gov/newsroom/faqs-regarding-the-aggregation-rules-
that was taken into account to determine box 1 of
under-section-448c2–that-apply-to-the-section-163j-
Schedule K-1, Part III. See Regulations sections
small-business-exemption.
1.721(c)-3 and 1.721(c)-6.
If a partner needs gross receipts information from a
partnership in order to figure the gross receipts test under Code AM. Section 1061 information. The partnership
section 448(c), and the partnership didn't report gross will furnish to the partners any information needed to
receipts on the Schedule K-1, the partner should request figure their capital gains with respect to an applicable
this information from the partnership. partnership interest. See Section 1061 Reporting
Instructions in Pub. 541.
Code AH. Noncash charitable contributions. If the
partnership made a noncash charitable contribution, your Code AN. Farming and fishing business. If the
share of the partnership’s adjusted basis in the property is partnership is involved in a farming or fishing business, it
limited to basis and is reported here. Additionally, your will report your distributive share of gross income and
share of the excess of the FMV over the adjusted basis of gains, as well as the losses and deductions attributable to
noncash and capital gain property contributions is such business activities. See section 1301.
reported here. Code AO. PTP information. Any information a PTP
Code AI. Interest and tax on deferred compensation needs to determine whether it meets the 90% qualifying
to partners. Interest and additional tax on compensation income test of section 7704(c)(2).
deferred under a section 409A nonqualified deferred A partner is required to notify the partnership of its
compensation plan that doesn't meet the requirements of TIP status as a PTP.
section 409A. See section 409A(a)(1)(B) to figure the
interest and additional tax on this income. Report this
interest and tax on Schedule 2 (Form 1040), line 17h. This Code AP. Inversion gain. The partnership will provide a
income is included in the amount in either box 4a or statement showing the amounts of each type of income or
box 4b. gain that's included in inversion gain. The partnership has
included inversion gain in income elsewhere on
Code AJ. Excess business loss limitation. If the Schedule K-1. Inversion gain is also reported under code
partnership has deductions attributable to a business AP because your taxable income and alternative minimum
activity, it'll provide a statement showing your distributive taxable income can't be less than the inversion gain. Also,

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your inversion gain (a) isn't taken into account in figuring Code AX. Reserved for future use.
the net operating loss (NOL) for the tax year or the NOL
that can be carried over to each tax year, (b) may limit your Code AY. Foreign partners, Form 8990, Schedule A.
credits, and (c) is treated as income from sources within The information needed to complete Form 8990,
the United States for the foreign tax credit. See section Schedule A, for foreign partners which are required to
7874 for details. report their allocable share of EBIE, excess taxable
income, and excess business interest income, if any, that's
Code AQ. Conservation reserve program payments. attributable to income effectively connected with a U.S.
Individuals who received social security retirement or trade or business. When required, the partnership will
disability benefits, and are partners in farm partnerships make this report on an attached statement to partners that
that receive conservation reserve program payments, are a foreign corporation or a nonresident alien or partners
don't pay self-employment tax on their portion of the that are a partnership (domestic or foreign) in which the
payments. The partnership will report your portion of the reporting partnership knows, or has a reason to know, that
conservation reserve program payments in box 20 using one or more of the partners is a foreign corporation or
code AQ. See Schedule SE (Form 1040) for information nonresident alien.
on excluding the payment from your calculation of
self-employment tax. Codes AZ through BD. Reserved for future use.
Code AR. IRA disclosure. If the partnership reported an Code ZZ. Other. Any other information you may need to
amount in box 20, code V, the partnership also reported file your return not shown elsewhere on Schedule K-1.
an IRA partner's unique EIN in box 20, code AR. See the
Instructions for Form 990-T; and Pub. 598, Tax on Box 21. Foreign Taxes Paid or
Unrelated Business Income of Exempt Organizations.
Accrued
Code AS. Qualifying advanced coal project property Foreign taxes paid or accrued reduce a partner's basis
and qualifying gasification project property. Use the and are limited to basis. Don't use this amount to
amounts the partnership provides you to figure the complete your Form 1116, Foreign Tax Credit; or Form
amounts to report on Form 3468, Part II. 1118, Foreign Tax Credit—Corporations. See
Code AT. Qualifying advanced energy project proper- Schedule K-3 to complete your Form 1116 or 1118.
ty. Use the amount the partnership provides you to figure
the amount to report on Form 3468, Part III. Box 22. More Than One Activity for
Code AU. Advanced manufacturing investment prop- At-Risk Purposes
erty. Use the amount the partnership provides you to
figure the amount to report on Form 3468, Part IV. When the partnership has more than one activity for
at-risk purposes, it'll check this box and attach a
Code AV. Reserved for future use. statement. Use the information in the attached statement
Code AW. Reportable transactions. Any information to correctly figure your at-risk limitation. For more
you need to complete a disclosure statement for information, see the discussion under At-Risk Limitations,
reportable transactions in which the partnership earlier.
participates. If the partnership participates in a transaction
that must be disclosed on Form 8886, Reportable Box 23. More than One Activity for
Transaction Disclosure Statement, both you and the
partnership may be required to file Form 8886 for the Passive Activity Purposes
transaction. The determination of whether you're required When the partnership has more than one activity for
to disclose a transaction of the partnership is based on the passive activity purposes, it'll check this box and attach a
category(ies) under which the transaction qualifies for statement. Use the information in the attached statement
disclosure and is determined by you and the partnership. to correctly figure your passive activity limitation. For more
You may have to pay a penalty if you're required to file information, see the discussion under Passive Activity
Form 8886 and don't do so. See the Instructions for Form Limitations, earlier.
8886 for details.

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List of Codes and References Used in Schedule K-1 (Form 1065)
Box Number / Item Where to report or where to find further reporting information.
Page numbers refer to these instructions.
1. Ordinary business income (loss). Determine whether the income (loss) is
passive or nonpassive and enter on your return as follows.
Passive loss See page 15
Passive income Schedule E (Form 1040), line 28, column (h)
Nonpassive loss See page 15
Nonpassive income Schedule E (Form 1040), line 28, column (k)
2. Net rental real estate income (loss) See page 15
3. Other net rental income (loss)
Net income Schedule E (Form 1040), line 28, column (h)
Net loss See Instructions for Form 8582
4a. Guaranteed payment services See Instructions for Schedule E (Form 1040)
4b. Guaranteed payment capital See Instructions for Schedule E (Form 1040)
4c. Guaranteed payment total See page 16
5. Interest income Form 1040 or 1040-SR, line 2b
6a. Ordinary dividends Form 1040 or 1040-SR, line 3b
6b. Qualified dividends Form 1040 or 1040-SR, line 3a
6c. Dividend equivalents See page 16
7. Royalties Schedule E (Form 1040), line 4
8. Net short-term capital gain (loss) Schedule D (Form 1040), line 5
9a. Net long-term capital gain (loss) Schedule D (Form 1040), line 12
9b. Collectibles (28%) gain (loss) 28% Rate Gain Worksheet, line 4 (Schedule D instructions)
9c. Unrecaptured section 1250 gain See page 16
10. Net section 1231 gain (loss) See page 17
11. Other income (loss)
Code A. Other portfolio income (loss) See page 17
Code B. Involuntary conversions See page 17
Code C. Section 1256 contracts & straddles Form 6781, line 1
Code D. Mining exploration costs recapture See 2022 Pub. 535
Code E. Cancellation of debt See page 17
Code F. Section 743(b) positive adjustments See page 17
Code G. Reserved for future use
Code H. Section 951(a) income inclusions See page 17
Code I. Gain (loss) from disposition of oil, gas, geothermal, or
See page 18
mineral properties (section 59(e))
Code J. Recoveries of tax benefit items See page 18
Code K. Gambling gains and losses See page 18
Code L. Any income, gain, or loss to the partnership from a
distribution under section 751(b) (certain distributions treated as See page 18
sales or exchanges)
Code M. Gain eligible for section 1045 rollover (replacement stock
See page 18
purchased by partnership)
Code N. Gain eligible for section 1045 rollover (replacement stock
See page 18
not purchased by the partnership)
Code O. Sale or exchange of QSB stock with section 1202 exclusion See page 19
Code P. Gain or loss on disposition of farm recapture property and
See page 19
other items to which section 1252 applies
Code Q. Gain or loss on Fannie Mae or Freddie Mac qualified
See page 19
preferred stock
Code R. Specially allocated ordinary gain (loss) See page 19
Code S. Non-portfolio capital gain (loss) See page 19
Codes T through X. Reserved for future use
Code ZZ. Other See page 19
12. Section 179 deduction See page 19
13. Other deductions
Code A. Cash contributions (60%) See page 19
Code B. Cash contributions (30%) See page 19
Code C. Noncash contributions (50%) See page 20

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Box Number / Item Where to report or where to find further reporting information.
Page numbers refer to these instructions.
Code D. Noncash contributions (30%) See page 20
Code E. Capital gain property to a 50% organization (30%) See page 20
Code F. Capital gain property (20%) See page 20
Code G. Contributions (100%) See page 20
Code H. Investment interest expense Form 4952, line 1
Code I. Deductions—royalty income Schedule E (Form 1040), line 19
Code J. Section 59(e)(2) expenditures See page 20
Code K. Excess business interest expense See page 21
Code L. Deductions—portfolio income (other) Schedule A (Form 1040), line 16
Code M. Amounts paid for medical insurance Schedule A (Form 1040), line 1; or Schedule 1 (Form 1040), line 17
Code N. Educational assistance benefits See page 21
Code O. Dependent care benefits Form 2441, line 12
Code P. Preproductive period expenses See page 21
Code Q. Reserved for future use
Code R. Pensions and IRAs See page 21
Code S. Reforestation expense deduction See page 21
Codes T through U. Reserved for future use
Code V. Section 743(b) negative adjustments See page 21
Code W. Soil and water conservation See page 21
Code X. Film, television, and theatrical production expenditures See page 21
Code Y. Expenditures for removal of barriers See page 22
Code Z. Itemized deductions See page 22
Code AA. Contributions to a capital construction fund (CCF) See page 22
Code AB. Penalty on early withdrawal of savings See page 22
Code AC. Interest expense allocated to debt-financed distributions See page 22
Code AD. Interest expense on working interest in oil or gas See page 22
Code AE. Deductions—portfolio income See page 22
Codes AF through AJ. Reserved for future use
Code ZZ. Other See page 22
14. Self-employment earnings (loss)
Note. If you have a section 179 deduction or any partner-level deductions, see page 22 before completing Schedule SE (Form 1040).
Code A. Net earnings (loss) from self-employment Schedule SE (Form 1040)
Code B. Gross farming or fishing income See page 22
Code C. Gross nonfarm income See page 22
15. Credits
Code A. Zero-emission nuclear power production See page 23
Code B. Production from advanced nuclear power facilities credit See page 23
Code C. Low-income housing credit (section 42(j)(5)) from
See page 23
post-2007 buildings
Code D. Low-income housing credit (other) from post-2007 buildings See page 23
Code E. Qualified rehabilitation expenditures (rental real estate) See page 23
Code F. Other rental real estate credits See page 23
Code G. Other rental credits See page 23
Code H. Undistributed capital gains credit Schedule 3 (Form 1040), line 13a
Code I. Biofuel producer credit See page 23
Code J. Work opportunity credit See page 23
Code K. Disabled access credit See page 23
Code L. Empowerment zone employment credit See page 23
Code M. Credit for increasing research activities See page 23
Code N. Credit for employer social security and Medicare taxes See page 23
Code O. Backup withholding See page 23
Code P. Unused investment credit from the qualifying advanced coal
project credit or qualifying gasification project credit allocated from See page 23
cooperatives
Code Q. Unused investment credit from the qualifying advanced See page 23
energy project credit allocated from cooperatives
Code R. Unused investment credit from the advanced See page 23
manufacturing investment credit allocated from cooperatives
Code S. Reserved for future use

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Box Number / Item Where to report or where to find further reporting information.
Page numbers refer to these instructions.
Code T. Unused investment credit from the energy credit allocated
See page 23
from cooperatives
Code U. Unused investment credit from the rehabilitation credit
See page 24
allocated from cooperatives
Code V. Advanced manufacturing production credit See page 24
Codes W and X. Reserved for future use
Code Y. Clean hydrogen production credit See page 24
Code Z. Orphan drug credit See page 24
Code AA. Enhanced oil recovery credit See page 24
Code AB. Renewable electricity production credit See page 24
Code AC. Biodiesel, renewable diesel, or sustainable aviation fuels
See page 24
credit
Code AD. New markets credit See page 24
Code AE. Credit for small employer pension plan startup costs See page 24
Code AF. Credit for small employer auto-enrollment See page 24
Code AG. Credit for small employer military spouse retirement plan
See page 24
eligibility
Code AH. Credit for employer-provided childcare facilities and
See page 24
services
Code AI. Low sulfur diesel fuel production credit See page 24
Code AJ. Qualified railroad track maintenance credit See page 24
Code AK. Credit for oil and gas production from marginal wells See page 24
Code AL. Distilled spirits credit See page 24
Code AM. Energy efficient home credit See page 24
Code AN. Alternative motor vehicle credit See page 24
Code AO. Alternative fuel vehicle refueling property credit See page 24
Code AP. Clean renewable energy bond credit See page 24
Code AQ. New clean renewable energy bond credit See page 24
Code AR. Qualified energy conservation bond credit See page 24
Code AS. Qualified zone academy bond credit See page 24
Code AT. Qualified school construction bond credit See page 24
Code AU. Build America bond credit See page 24
Code AV. Credit for employer differential wage payments See page 24
Code AW. Carbon oxide sequestration credit See page 24
Code AX. Carbon oxide sequestration credit recapture See page 24
Code AY. New clean vehicles credit See page 24
Code AZ. Qualified commercial clean vehicle credit See page 24
Code BA. Credit for small employer health insurance premiums See page 24
Code BB. Employer credit for paid family and medical leave See page 24
Code BC. Eligible credits from transferor(s) under section 6418 See page 24
Codes BD through BG. Reserved for future use
Code ZZ. Other See page 24
17. Alternative minimum tax (AMT) items
Code A. Post-1986 depreciation adjustment See Instructions for Form 6251
Code B. Adjusted gain or loss See Instructions for Form 6251
Code C. Depletion (other than oil & gas) See Instructions for Form 6251
Code D. Oil, gas, and geothermal—gross income See Instructions for Form 6251
Code E. Oil, gas, and geothermal—deductions See Instructions for Form 6251
Code F. Other AMT items See Instructions for Form 6251
18. Tax-exempt income and nondeductible expenses
Code A. Tax-exempt interest income Form 1040 or 1040-SR, line 2a
Code B. Other tax-exempt income See page 25
Code C. Nondeductible expenses See page 25
19. Distributions
Code A. Cash and marketable securities See page 25
Code B. Distribution subject to section 737 See page 25
Code C. Other property See page 26
20. Other information
Code A. Investment income Form 4952, line 4a
Code B. Investment expenses Form 4952, line 5

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Box Number / Item Where to report or where to find further reporting information.
Page numbers refer to these instructions.
Code C. Fuel tax credit information Form 4136
Code D. Qualified rehabilitation expenditures (other than rental real
See page 26
estate)
Code E. Basis of energy property See page 26
Code F. Recapture of low-income housing credit for section 42(j)(5)
See page 26
partnerships
Code G. Recapture of low-income housing credit for other
See page 26
partnerships
Code H. Recapture of investment credit See Form 4255
Code I. Recapture of other credits See page 27
Code J. Look-back interest—completed long-term contracts See Form 8697
Code K. Look-back interest—income forecast method See Form 8866
Code L. Dispositions of property with section 179 deductions See page 27
Code M. Recapture of section 179 deduction See page 27
Code N. Business interest expense (information item) See page 27
Code O. Section 453(l)(3) information Schedule 2 (Form 1040), line 14
Code P. Section 453A(c) information Schedule 2 (Form 1040), line 15
Code Q. Section 1260(b) information Schedule 2 (Form 1040), line 17z
Code R. Interest allocable to production expenditures See Regulations sections 1.263A-8 through -15
Code S. Capital construction fund (CCF) nonqualified withdrawals Schedule 2 (Form 1040), line 17z
Code T. Depletion deduction See 2022 Pub. 535
Code U. Section 743(b) basis adjustment See page 28
Code V. Unrelated business taxable income See page 28
Code W. Precontribution gain (loss) Form 8949 and/or Schedule D (Form 1040); or Form 4797
Code X. Payment obligations including guarantees and deficit
See page 28
obligations (DROs)
Code Y. Net investment income See Instructions for Form 8960
Code Z. Section 199A information Form 8995 or Form 8995-A
Code AA. Section 704(c) information See page 29
Code AB. Section 751 gain (loss) See page 29
Code AC. Section 1(h)(5) gain (loss) See page 29
Code AD. Deemed section 1250 unrecaptured gain See page 29
Code AE. Excess taxable income See Instructions for Form 8990
Code AF. Excess business interest income See page 30
Code AG. Gross receipts for section 448(c) See page 30
Code AH. Noncash charitable contributions See page 30
Code AI. Interest and tax on deferred compensation to partners See page 30
Code AJ. Excess business loss limitation See page 30
Code AK. Gain from mark-to-market election See page 30
Code AL. Section 721(c) partnership See page 30
Code AM. Section 1061 information See page 30
Code AN. Farming and fishing business See page 30
Code AO. PTP information See page 30
Code AP. Inversion gain See page 30
Code AQ. Conservation reserve program payments See page 31
Code AR. IRA disclosure See page 31
Code AS. Qualifying advanced coal project property and qualifying
See page 31
gasification project property
Code AT. Qualifying advanced energy project property See page 31
Code AU. Advanced manufacturing investment property See page 31
Code AV. Reserved for future use
Code AW. Reportable transactions See page 31
Code AX. Reserved for future use
Code AY. Foreign partners, Form 8990, Schedule A See page 31
Codes AZ through BD. Reserved for future use
Code ZZ. Other See page 31
21. Foreign taxes paid or accrued See page 31

Partner's Inst. for Sch. K-1 (Form 1065) (2023) 35

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