Schedule Q (Form 1 Tax Liability of Qualified Derivatives Dealer (QDD)

Note: The draft you are looking for begins on the next page.

Caution: DRAFT—NOT FOR FILING
This is an early release draft of an IRS tax form, instructions, or publication,
which the IRS is providing for your information. Do not file draft forms and do
not rely on draft forms, instructions, and publications for filing. We do not
release draft forms until we believe we have incorporated all changes (except
when explicitly stated on this coversheet). However, unexpected issues
occasionally arise, or legislation is passed—in this case, we will post a new draft
of the form to alert users that changes were made to the previously posted draft.
Thus, there are never any changes to the last posted draft of a form and the
final revision of the form. Forms and instructions generally are subject to OMB
approval before they can be officially released, so we post only drafts of them
until they are approved. Drafts of instructions and publications usually have
some changes before their final release.
Early release drafts are at IRS.gov/DraftForms and remain there after the
final release is posted at IRS.gov/LatestForms. All information about all forms,
instructions, and pubs is at IRS.gov/Forms.
Almost every form and publication has a page on IRS.gov with a friendly
shortcut. For example, the Form 1040 page is at IRS.gov/Form1040; the Pub.
501 page is at IRS.gov/Pub501; the Form W-4 page is at IRS.gov/W4; and the
Schedule A (Form 1040/SR) page is at IRS.gov/ScheduleA. If typing in a link
above instead of clicking on it, be sure to type the link into the address bar of
your browser, not a Search box.
If you wish, you can submit comments to the IRS about draft or final forms,
instructions, or publications at IRS.gov/FormsComments. We cannot respond to
all comments due to the high volume we receive and may not be able to
consider many suggestions until the subsequent revision of the product.
If you have comments on reducing paperwork and respondent (filer) burden,
with respect to draft or final forms, please respond to the relevant information
collection through the Federal Register process; for more info, click here.

SCHEDULE Q
(Form 1042)

2022

Attach to Form 1042.

Department of the Treasury
Internal Revenue Service

Go to www.irs.gov/Form1042 for the latest information.
Employer identification number

Name of taxpayer
Name of QDD

OMB No. 1545-0096

Tax Liability of Qualified Derivatives Dealer (QDD)

DRAFT AS OF
August 4, 2022
DO NOT FILE
QI-EIN

QDD Tax Year (enter month, day, and year for beginning and ending dates)
Beginning

, 20

, and ending

, 20

.

Indicate the year or portion of the year to which the schedule relates (enter month, day, and year beginning
and ending dates)
Beginning

, 20

, and ending

, 20

Total section 871(m) amount . . . . . . . . . . . .
Total dividends received in equity derivatives dealer capacity . .
Total QDD tax liability pursuant to section 3.09(A) of the Qualified
Intermediary Agreement . . . . . . . . . . . . . .
4
Total QDD tax liability pursuant to section 3.09(B) of the Qualified
Intermediary Agreement . . . . . . . . . . . . . .
5
Total QDD tax liability pursuant to section 3.09(C) of the Qualified
Intermediary Agreement:
a Income Type
b Income Type
c Income Type
d Income Type
6
Total of line 5 amounts . . . . . . . . . . . . . .

Who Must File
If the taxpayer or any branch of the taxpayer was a qualified
derivatives dealer (QDD) (defined below) during the tax year,
Schedule Q must be completed and filed for each of those QDDs.
The taxpayer must file Schedule Q as an attachment to Form 1042
even if the QDD has zero tax liability.
Qualified derivatives dealer (QDD). A QDD is a home office or
branch that, in accordance with the qualified intermediary
agreement (QIA) (defined below), qualifies and has been approved
for QDD status and satisfies the requirements of the QIA. See the
QIA for additional information.
Qualified intermediary agreement (QIA). The QIA is section 6 of
Rev. Proc. 2017-15.

of

.

(a)
Gross Amount

Summary of QDD Tax Liability

1
2
3

Schedule

(b)
Withholding
Tax Rate

(c)
Amount of
Tax Liability (column
(a) x column (b))

1
2

3

4

5a
5b
5c
5d
6

Column (c), Amount of Tax Liability. Except as provided in the
Note immediately below, the amount in column (c) is determined by
multiplying column (a) by column (b). This column is not reduced by
any withholding that has occurred.
Note: For calendar years 2018 through 2022, certain information is
not required, as indicated in the line instructions below. However, if
the taxpayer has a fiscal year rather than a calendar year, that
begins in 2022, information is required for any amounts paid or
accrued on or after January 1, 2023.
Line 1. The gross amount to be entered in column (a) is the sum of
each section 871(m) amount for the QDD for the relevant period.
See section 2.73 of the QIA for the definition of section 871(m)
amount.

General Instructions

Note: For calendar years 2019 through 2022, this information is not
required.

A separate Schedule Q is required for each QDD. In addition, if a
taxpayer has a fiscal year rather than a calendar year, the taxpayer
must provide a separate Schedule Q for each QDD for each portion
of the fiscal year that falls within the calendar year.

Line 3. Column (c) is the sum of each section 3.09(A) amount for the
QDD for the relevant period.

Example. A QDD with a fiscal year beginning September 1 and
ending August 31 would complete 2 schedules (one for the period
of January 1, 2022, through August 31, 2022, and one for the period
of September 1, 2022, through December 31, 2022).

Specific Instructions
Name of QDD. The name of the QDD should follow the naming
protocol used for applying to be a QDD.
Number of schedules filed. A QDD may be required to file multiple
Schedules Q, for example, if it has multiple branches that are QDDs
or if it is a fiscal year taxpayer (as explained in General Instructions
above). Indicate the number of each Schedule Q filed, as well as the
total number of Schedules Q being filed by the taxpayer in the entry
spaces provided.
For Paperwork Reduction Act Notice, see the Instructions for Form 1042.

Line 2. For calendar years 2019 through 2022, only the gross
amount (column (a)) and tax rate (column (b)) are required.

Note: For calendar years 2019 through 2022, this information is not
required.
Line 4. Enter the information requested in columns (a), (b), and (c).
Line 5. In addition to specifying the type of income (for example,
dividends or interest), enter the information requested in columns
(a), (b), and (c) separately for each income type. For dividends,
include all dividends, including dividends separately stated on
line 2.
Note: For calendar years 2019 through 2022, do not include
dividends included on line 2.

Cat. No. 71805T

Schedule Q (Form 1042) 2022