pro forma 1065 K1

Technical topics regarding tax preparation.
#1
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Client received a K-1 with notes Proforma , no return filed.

the partnership is in Cayman Island ( real estate investment) , so it is PFIC ( paasive foreign investment company)

my question is:

Do I just input this K1 as K1 ( it has EIN) too? or I need to enter it in Form 8621?

Thanks
 

#2
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If it is a partnership, it is not a PFIC
 

#3
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HenryDavid wrote:If it is a partnership, it is not a PFIC


is a parntership. anyway, my question is can I just enter the pro forma 1065 K1 ?
 

#4
zl28  
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does the ptshp own a foreign corporation?
 

#5
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zl28 wrote:does the ptshp own a foreign corporation?

the parntership itself is a foreign parntership, it is in Cayman. However, it has an EIN, and provided its member a pro forma 1065 K1, ( also has k2,k3) everything just like a k1 , but with a note : this is a pro forma k1, no return filed.
 

#6
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You need to report your client's distributive share on the return like you would for a regular US partnership. Trade or business income would go on Sch E, page 2 and the foreign partnership box would be checked.

You also need to read the instructions for Form 8865 to determine if you need to prepare and attach that form to your client's return. The requirements are bright line and clear.

If your client owns more than 50% of the foreign phsip, you need to consider that it's a controlled entity for FBAR and other foreign informational report/return purposes.

I would also confirm with the management of the foreign pship (or their CPA) that that the foreign entity is indeed a partnership for US federal income tax purposes and a Form 8832 was timely filed with the IRS to elect this status if required. But that's just me. More of a C.Y.A. kind of thing for the file.
 

#7
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ManVsTax wrote:You need to report your client's distributive share on the return like you would for a regular US partnership. Trade or business income would go on Sch E, page 2 and the foreign partnership box would be checked.

You also need to read the instructions for Form 8865 to determine if you need to prepare and attach that form to your client's return. The requirements are bright line and clear.

If your client owns more than 50% of the foreign phsip, you need to consider that it's a controlled entity for FBAR and other foreign informational report/return purposes.

I would also confirm with the management of the foreign pship (or their CPA) that that the foreign entity is indeed a partnership for US federal income tax purposes and a Form 8832 was timely filed with the IRS to elect this status if required. But that's just me. More of a C.Y.A. kind of thing for the file.

Thanks .

Their shares less than 10% and is a limited partner. So I think 8865 should not required , but form 8621 may be yes?
 

#8
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but form 8621 may be yes?

You’re a little lost. An entity can only be one thing for U.S. tax purposes.
 

#9
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Jeff-Ohio wrote:
but form 8621 may be yes?

You’re a little lost. An entity can only be one thing for U.S. tax purposes.

Who must file form 8621?
A U.S. person that is a direct or indirect shareholder of a passive foreign investment company (PFIC) files Form 8621 if they: Receive certain direct or indirect distributions from a PFIC. Recognize a gain on a direct or indirect disposition of PFIC stock.

so if form 8621 is not need , since the foreign entity is a parnership.

but since the % of share is less than 1%, Form 8865 also doesn't require.

So what form I will need? - directly enter the pro forma K-1 as K-1?

the client also have another foreign partnership ( share less 1% too 0 but without providing Pro forma K1, they just list income ( ordinary income and dividend income > 40K) where shall I input these amounts?

Thanks
 

#10
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https://www.hrblock.com/expat-tax-prepa ... ual-funds/

THIS IS THE ARTICLE TALKING ABOUT IT
 

#11
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RosyinOregon wrote:So what form I will need? - directly enter the pro forma K-1 as K-1?


I already answered this in post 6.
 

#12
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ManVsTax wrote:
RosyinOregon wrote:So what form I will need? - directly enter the pro forma K-1 as K-1?


I already answered this in post 6.


Ok, thanks, Done this one.
 


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