8865 Instructions for Form 8865

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2023

Department of the Treasury
Internal Revenue Service

Instructions for Form 8865
Return of U.S. Persons With Respect to Certain Foreign Partnerships

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Section references are to the Internal Revenue Code
unless otherwise noted.
Contents
General Instructions . . . . . . . . . . . . . . . . . . . . . .
Specific Instructions . . . . . . . . . . . . . . . . . . . . . .
Schedule A. Constructive Ownership of
Partnership Interest . . . . . . . . . . . . . . . . . . .
Schedule A-1. Certain Partners of Foreign
Partnership . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule A-2. Foreign Partners of Section 721(c)
Partnership . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule A-3. Affiliation Schedule . . . . . . . . . . . .
Schedule B. Income Statement—Trade or
Business Income . . . . . . . . . . . . . . . . . . . . .
Schedule D. Capital Gains and Losses . . . . . . . .
Schedule G (Form 8865). Statement of Application
of the Gain Deferral Method Under Section
721(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule H (Form 8865). Acceleration Events and
Exceptions Reporting Relating to Gain
Deferral Method Under Section 721(c) . . . . . .
Schedules K, Partners' Distributive Share Items,
and K-1 (Form 8865), Partner’s Share of
Income, Deductions, Credits, etc. . . . . . . . . .
Schedules K-2 (Form 8865), Partners’ Distributive
Share Items—International, and K-3 (Form
8865), Partner’s Share of Income, Deductions,
Credits, etc.—International . . . . . . . . . . . . . .
Schedule L. Balance Sheets per Books . . . . . . . .
Schedule M-1. Reconciliation of Income (Loss) per
Books With Income (Loss) per Return . . . . . .
Schedule M-2. Analysis of Partners' Capital
Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule N. Transactions Between Controlled
Foreign Partnership and Partners or Other
Related Entities . . . . . . . . . . . . . . . . . . . . . .
Schedule O (Form 8865). Transfer of Property to a
Foreign Partnership . . . . . . . . . . . . . . . . . . .
Schedule P (Form 8865). Acquisitions,
Dispositions, and Changes of Interests in a
Foreign Partnership . . . . . . . . . . . . . . . . . . .
List of Codes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page
... 1
... 7

See What’s New in the Instructions for Form 1065 for
changes and new Internal Revenue Code sections that
may affect foreign partnerships with fiscal years,
corporate partners, or certain impacted activities.

. . 10

Reminders

. . 11

. . 11
. . 11

. . 11
. . 11

. . 12

. . 14

. . 16

. . 17
. . 17

Schedules K-2 (Form 8865) and K-3 (Form 8865) for
partnerships. For tax years beginning after 2020, most
items of international tax relevance are reported on
Schedules K-2 and K-3, replacing prior reporting on Form
8865, Schedules K and K-1, line 16, Foreign
transactions, and certain reporting on Form 8865,
Schedules K and K-1, line 20, Other information.

The schedules are designed to provide greater clarity
for partners on how to compute their U.S. income tax
liability regarding items of international tax relevance,
including claiming deductions and credits. Go to IRS.gov
for the schedules and the Instructions for Schedules K-2
and K-3 (Form 8865) for more information. Form 8865,
Schedules K and K-1, retain line 16 for the partnership to
check a box indicating that it has items of international
tax relevance and that it completed Schedules K-2 and
K-3. For purposes of basis adjustments and to reconcile
income, Form 8865 retains total foreign taxes paid or
accrued but moves this reporting to Schedule K, line 21.
See the Instructions for Form 1065 for amounts to report
on line 21.

. . 18

Important: Foreign taxes paid or accrued must be
reported on Schedules K-2 and K-3 for purposes of
reporting information necessary for an eligible partner to
claim a foreign tax credit.

. . 18

General Instructions

. . 18

Only the general instructions for Schedules B, K, K-1,
M-1, and M-2 are included later in these instructions. If
you are required to complete these schedules for Form
8865, use the specific instructions for the corresponding
schedules of Form 1065, U.S. Return of Partnership
Income.

. . 18

. . 20
. . 22
. . 30

Future Developments
For the latest information about developments related to
Form 8865, its schedules, and its instructions, such as
legislation enacted after they were published, go to
IRS.gov/Form8865.

Nov 27, 2023

What’s New

IF you are completing Form
8865...

THEN use the instructions for
Form 1065...

Schedule B

page 1 (income and deductions).

Schedules K and K-1

Schedules K and K-1.

Schedule K-3

Schedule K-3.

Schedule L

Schedule L.

Schedule M-1

Schedule M-1.

Schedule M-2

Schedule M-2.

Cat. No. 26053N

schedules that Category 3 filers are required to submit
(Schedules A-1 and O).

Note. If you are reporting capital gains and losses, use
Schedule D (Form 1065). See the Instructions for
Schedule D (Form 1065).

Complete a separate Form 8865 and the applicable
schedules for each foreign partnership.

Purpose of Form

File the 2023 Form 8865 with your income tax return
for your tax year beginning in 2023.

Use Form 8865 to report the information required under
section 6038 (reporting with respect to controlled foreign
partnerships), section 6038B (reporting of transfers to
foreign partnerships), or section 6046A (reporting of
acquisitions, dispositions, and changes in foreign
partnership interests).

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If a Form 8832, Entity Classification Election, was filed
for this entity for the current tax year, see When To File
and Where To File in the instructions for Form 8832 to
determine if you are required to attach a copy of the Form
8832 to the tax return to which the Form 8865 is being
attached.

Who Must File

A U.S. person qualifying under one or more of the
Categories of Filers (see below) must complete and file
Form 8865. These instructions and the Filing
Requirements for Categories of Filers chart, later, explain
the information, statements, and schedules required for
each category of filer. If you qualify under more than one
category for a particular foreign partnership, you must
submit all the items required for each category under
which you qualify.

If a domestic section 721(c) partnership is formed on
or after January 18, 2017, and the gain deferral method is
applied, then a U.S. transferor must file Form 8865 for
that partnership. See Regulations section 1.721(c)-6(b)
(4). See Section 721(c) partnership, Gain deferral
method, and U.S. transferor, later.

A U.S. transferor that is required to provide information
for a partnership under Regulations sections
1.721(c)-6(b)(2)(iv) and 1.721(c)-6(b)(3)(xi) must file a
separate Form 8865 (along with all necessary schedules
and attachments) for each partnership treated as a U.S.
transferor under Regulations sections 1.721(c)-3(d) and
1.721(c)-6(c)(2). See U.S. transferor, later.

Example. If you qualify as a Category 2 and a
Category 3 filer, you must submit all the schedules
required of Category 2 filers (page 1 of Form 8865, and
Schedules A, A-2, N, K-1, and K-3) plus any additional

Filing Requirements for Categories of Filers

Category of Filers

Filing Requirements

1

2

3

4

Identifying information—page 1 of Form 8865
Schedule A—Constructive Ownership of Partnership Interest
Schedule A-1—Certain Partners of Foreign Partnership
Schedule A-3—Affiliation Schedule
Schedule B—Income Statement—Trade or Business Income
Schedule G (Form 8865)—Statement of Application of the Gain Deferral Method Under Section
721
Schedule H (Form 8865)—Acceleration Events and Exceptions Reporting Relating to Gain
Deferral Method Under Section 721(c)
Schedule K—Partners' Distributive Share Items
Schedule K-1 (Form 8865)—Partner's Share of Income, Deductions, Credits, etc. (direct
partners only)
Schedule K-2 (Form 8865)—Partners’ Distributive Share Items—International
Schedule K-3 (Form 8865)—Partner’s Share of Income, Deductions, Credits, etc.—International
Schedule L—Balance Sheets per Books
Schedule M-1—Reconciliation of Income (Loss) per Books With Income (Loss) per Return
Schedule M-2—Analysis of Partners' Capital Accounts
Schedule N—Transactions Between Controlled Foreign Partnership and Partners or Other
Related Entities
Schedule D—Schedule D (Form 1065), Capital Gains and Losses
Schedule O (Form 8865)—Transfer of Property to a Foreign Partnership
Schedule P (Form 8865)—Acquisitions, Dispositions, and Changes of Interests in a Foreign
Partnership

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Instructions for Form 8865 (2023)

Categories of Filers

Category 4 filer. A Category 4 filer is a U.S. person that
had a reportable event under section 6046A during that
person's tax year. There are three categories of
reportable events under section 6046A: acquisitions,
dispositions, and changes in proportional interests.
Acquisitions. A U.S. person that acquires a foreign
partnership interest has a reportable event if:
• The person didn’t own a 10% or greater direct interest
in the partnership and, as a result of the acquisition, the
person owns a 10% or greater direct interest in the
partnership (for example, from 9% to 10%). For purposes
of this rule, an acquisition includes an increase in a
person's direct proportional interest (see Changes in
proportional interests, later); or
• Compared to the person's direct interest when the
person last had a reportable event, after the acquisition
the person's direct interest has increased by at least a
10% interest (for example, from 11% to 21%).
An acquisition of a section 721(c) partnership interest
may be an acceleration event exception under the gain
deferral method. See Regulations section 1.721(c)-5. In
this case, the acquirer may become a successor U.S.
transferor and may have a reporting requirement under
Regulations section 1.721(c)-6. See the specific
instructions for Schedule H, later.
Dispositions. A U.S. person that disposes of a foreign
partnership interest has a reportable event if:
• The person owned a 10% or greater direct interest in
the partnership before the disposition and, as a result of
the disposition, the person owns less than a 10% direct
interest (for example, from 10% to 8%). For purposes of
this rule, a disposition includes a decrease in a person's
direct proportional interest; or
• Compared to the person's direct interest when the
person last had a reportable event, after the disposition
the person's direct interest has decreased by at least a
10% interest (for example, from 21% to 11%).
A disposition of a section 721(c) partnership interest
may be an acceleration event for purposes of applying
the gain deferral method. The U.S. transferor may be
required to recognize gain in an amount equal to the
remaining built-in gain on the section 721(c) property
previously contributed to the section 721(c) partnership.
See Regulations section 1.721(c)-4. For acceleration
events exceptions, see Regulations section 1.721(c)-5.
See the specific instructions for Schedule H, later.
Changes in proportional interests. A U.S. person
has a reportable event if compared to the person's direct
proportional interest the last time the person had a
reportable event, the person's direct proportional interest
has increased or decreased by at least the equivalent of
a 10% interest in the partnership.
Special rule for a partnership interest owned on
December 31, 1999. If the U.S. person owned at least a
10% direct interest in the foreign partnership on
December 31,1999, then comparisons should be made to
the person's direct interest on December 31,1999. Once
the person has a reportable event after December
31,1999, future comparisons should be made by
reference to the last reportable event.

Category 1 filer. A Category 1 filer is a U.S. person who
controlled the foreign partnership at any time during the
partnership's tax year. Control of a partnership is
ownership of more than a 50% interest in the partnership.
See the definition of 50% interest, later. There may be
more than one Category 1 filer for a partnership for a
particular partnership tax year. See U.S. person and
Foreign partnership, later.
A Category 1 filer also includes a U.S. transferor who
must report certain information for a section 721(c)
partnership for the tax year of contribution and
subsequent years, pursuant to Regulations section
1.721(c)-6. A Category 1 filer fulfills this reporting
requirement by filing Schedule G and, in certain
circumstances, Schedule H. See Section 721(c)
partnership and U.S. transferor, later.

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Category 2 filer. A Category 2 filer is a U.S. person who
at any time during the tax year of the foreign partnership
owned a 10% or greater interest in the partnership while
the partnership was controlled by U.S. persons each
owning at least a 10% interest. However, if the foreign
partnership had a Category 1 filer at any time during that
tax year, no person will be considered a Category 2 filer.
See the definition of a 10% interest, later.

Category 3 filer. A Category 3 filer is a U.S. person who
contributed property during that person's tax year to a
foreign partnership in exchange for an interest in the
partnership (a section 721 transfer), if that person either:
1. Owned directly or constructively at least a 10%
interest in the foreign partnership immediately after the
contribution, or
2. The value of the property contributed (when added
to the value of any other property contributed to the
partnership by such person, or any related person, during
the 12-month period ending on the date of transfer)
exceeds $100,000.
If a domestic partnership contributes property to a
foreign partnership, the domestic partnership's partners
are considered to have transferred a proportionate share
of the contributed property to the foreign partnership.
However, if the domestic partnership files Form 8865 and
properly reports all the required information for the
contribution, its partners will not be required to report the
transfer.

A Category 3 filer includes a U.S. transferor who (a)
contributes section 721(c) property to a section 721(c)
partnership, and (b) has reporting requirements pursuant
to Regulations section 1.721(c)-6(b)(2). The Category 3
filer fulfills this reporting requirement by filing
Schedule G, in addition to Schedule O, and, in certain
circumstances, Schedule H. See Section 721(c) property,
later.
Category 3 also includes a U.S. person that previously
transferred appreciated property to the partnership and
was required to report that transfer under section 6038B,
if the foreign partnership disposed of such property while
the U.S. person remained a direct or indirect partner in
the partnership.

Instructions for Form 8865 (2023)

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3. Form 8865 is filed for the foreign partnership by
another Category 1 filer under the multiple Category 1
filers exception.

Exceptions to Filing
Multiple Category 1 filers. If during the tax year of the
partnership more than one U.S. person qualifies as a
Category 1 filer, only one of these Category 1 partners is
required to file Form 8865. A U.S. person with a
controlling interest in the losses or deductions of the
partnership isn’t permitted to be the filer of Form 8865 if
another U.S. person has a controlling interest in capital or
profits; only the latter may file the return. The U.S. person
that files the Form 8865 must complete item F on page 1.
The single Form 8865 to be filed must contain all of
the information that would be required if each Category 1
filer filed a separate Form 8865. Specifically, separate
Schedules N, K-1, and K-3 (if applicable) must be
attached to the Form 8865 for each Category 1 filer. Also,
items B, C, and D on page 1 and Schedule A on page 2
of Form 8865 must be completed for each Category 1
filer not filing the form. Attach a separate statement listing
this information to the single Form 8865.
A Category 1 filer not filing Form 8865 must attach a
statement entitled “Controlled Foreign Partnership
Reporting” to that person's income tax return.
The statement must include the following information.
• A statement that the person qualified as a Category 1
filer, but is not submitting Form 8865 under the multiple
Category 1 filers exception.
• The name, address, and identifying number (if any) of
the foreign partnership of which the person qualified as a
Category 1 filer.
• A statement that the filing requirement has been or will
be satisfied.
• The name and address of the person filing Form 8865
for this partnership.
• The Internal Revenue Service Center where the Form
8865 must be filed (or indicate “electronic filing” if the
Form 8865 has been or will be filed electronically).

To qualify for the constructive ownership filing
exception, the indirect partner must file with its income
tax return a statement entitled “Controlled Foreign
Partnership Reporting.”
This statement must contain the following information.
1. A statement that the indirect partner was required
to file Form 8865, but isn’t doing so under the
constructive owners exception.
2. The names and addresses of the U.S. persons
whose interests the indirect partner constructively owns.
3. The name and address of the foreign partnership
for which the indirect partner would have had to have filed
Form 8865 but for this exception.
4. If the indirect partner is a domestic corporation, a
statement setting forth all the information that the indirect
partner would have had to provide in response to
questions G8a and G8b on Form 8865. See Item H10.
Separate Units Note, later, for more information.

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Members of an affiliated group of corporations filing
a consolidated return. If one or more members of an
affiliated group of corporations filing a consolidated return
qualify as Category 1 or 2 filers for a particular foreign
partnership, the common parent corporation may file one
Form 8865 on behalf of all of the members of the group
required to report. Except for group members who also
qualify under the constructive owners exception, the
Form 8865 must contain all the information that would
have been required to be submitted if each group
member filed its own Form 8865.
Exception for certain trusts. Trusts relating to state
and local government employee retirement plans that
otherwise would have Forms 8865 reporting
requirements with regard to foreign partnerships aren’t
required to file Form 8865.

A U.S. person who qualifies for this exception to
the Category 1 filing requirement would still have
CAUTION to file a separate Form 8865 if that person is also
subject to the filing requirements of Category 3 or 4. This
separate Form 8865 would include all the information
required for a Category 3 filer, a Category 4 filer, or a
U.S. transferor who must report certain information for a
section 721(c) partnership for the year of contribution and
subsequent years, pursuant to Regulations section
1.721(c)-6, in addition to the “Controlled Foreign
Partnership Reporting” statement.

!

Exception for certain Category 4 filers. If you qualify
as a Category 3 and 4 filer because you contributed
property to a foreign partnership in exchange for a 10%
or greater interest in that partnership, you aren’t required
to report this transaction under both Category 3 and 4
filing requirements. If you properly report the contribution
of property under the Category 3 rules, you aren’t
required to report it as a Category 4 filer. However, the
acquisition will count as a reportable event to determine if
a later change in your partnership interest qualifies as a
reportable event under Category 4.

Constructive owners. See Constructive ownership,
later. A Category 1 or 2 filer that doesn’t own a direct
interest in the partnership and that is required to file this
form solely because of constructive ownership from a
U.S. person(s) isn’t required to file Form 8865 if:
1. Form 8865 is filed by the U.S. person(s) through
which the indirect partner constructively owns an interest
in the foreign partnership,
2. The U.S. person through which the indirect partner
constructively owns an interest in the foreign partnership
is also a constructive owner and meets all the
requirements of this constructive ownership filing
exception, or

Example. Partner A doesn’t own an interest in FPS, a
foreign partnership. Partner A transfers property to FPS
in exchange for a 15% direct interest. Partner A qualifies
as a Category 3 filer because he transferred property to a
foreign partnership and owned at least a 10% interest in
FPS immediately after the contribution. Partner A is also
a Category 4 filer because he didn’t own a 10% or
greater direct interest in FPS and as a result of the
acquisition now owns a 10% or greater direct interest in
FPS. If Partner A properly reports the contribution on
Form 8865 as a Category 3 filer, Partner A isn’t required
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Instructions for Form 8865 (2023)

to report his acquisition of the 15% interest in FPS as a
Category 4 filer.

Definitions
Partnership. A partnership is the relationship between
two or more persons who join to carry on a trade or
business, with each person contributing money, property,
labor, or skill and each expecting to share in the profits
and losses of the business whether or not a formal
partnership agreement is made.
The term “partnership” includes a limited partnership,
syndicate, group, pool, joint venture, or other
unincorporated organization, through or by which any
business, financial operation, or venture is carried on,
that isn’t, within the meaning of the regulations under
section 7701, a corporation, trust, estate, or sole
proprietorship.
A joint undertaking merely to share expenses isn’t a
partnership. Mere co-ownership of property that is
maintained and leased or rented isn’t a partnership.
However, if the co-owners provide services to the
tenants, a partnership exists.

Relief for Category 1 and 2 Filers When the
Foreign Partnership Files Form 1065
If a foreign partnership files Form 1065 for its tax year,
Category 1 and 2 filers may use a copy of the completed
Form 1065 schedules in place of the equivalent
schedules of Form 8865.

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If you file Form 8865 with an electronically filed income
tax return, see the electronic filing publications identified
in the instructions for your income tax return for more
information.
See the first paragraph under General Instructions,
earlier, for the Form 1065 schedules that are equivalent
to the Form 8865 schedules.

Example. Partner A is a Category 1 filer with respect
to FPS, a foreign partnership, during the 2023 tax year.
FPS completes and files a Form 1065 for its 2023 tax
year. Instead of completing Schedules B, K, K-2, L, M-1,
M-2, K-1 and K-3 of Form 8865, Partner A may attach to
its Form 8865 page 1 of Form 1065 and Form 1065
Schedules K, K-2, L, M-1, M-2, K-1 and K-3 (including
the Schedules K-1 and K-3 for Partner A and all other
U.S. persons owning 10% or greater direct interests in
FPS). Partner A must complete the following items and
schedules on Form 8865.
• The first and second pages.
• Schedule A.
• Schedule A-1.
• Schedule A-2.
• Schedule A-3.
• Schedule G (Form 8865).
• Schedule H (Form 8865).
• Schedule M.
• Schedule N.

Foreign partnership. A foreign partnership is a
partnership that isn’t created or organized in the United
States or under the law of the United States or of any
state or the District of Columbia. If a domestic section
721(c) partnership is formed on or after January 18,
2017, and the gain deferral method is applied, then the
section 721(c) partnership is treated as a foreign
partnership for purposes of Form 8865 and these
instructions. See Regulations section 1.721(c)-6(b)(4).

Section 721(c) partnership. A partnership (domestic or
foreign) is a section 721(c) partnership if there is a
contribution of section 721(c) property to the partnership
and, after the contribution (and all transactions related to
the contribution), (a) a related foreign person with respect
to the U.S. transferor is a direct or indirect partner in the
partnership; and (b) the U.S. transferor and related
persons own 80% or more of the interests in partnership
capital, profits, deductions, or losses. See Regulations
section 1.721(c)-1(b)(14).

Example. Partner A is a Category 2 filer with respect
to FPS, a foreign partnership. If FPS completes and files
a Form 1065 for its 2023 tax year, Partner A may file with
Form 8865 the Schedules K-1 and K-3 (Form 1065) that
it receives from the partnership instead of Schedules K-1
and K-3 (Form 8865). Partner A must complete the
following items and schedules on Form 8865.
• The first and second pages.
• Schedule A.
• Schedule A-2.
• Schedule N.

U.S. transferor. A U.S. transferor is a U.S. person other
than a domestic partnership. See Regulations section
1.721(c)-1(b)(18).
Section 721(c) property. Section 721(c) property is
property (other than excluded property) with built-in gain
that is contributed to a partnership by a U.S. transferor,
including pursuant to a contribution described in
Regulations section 1.721(c)-2(d) (partnership
look-through rule). See Regulations section 1.721(c)-1(b)
(15).

When and Where To File
Attach Form 8865 to your income tax return (or, if
applicable, partnership or exempt organization return)
and file both by the due date (including extensions) for
that return. If you don’t have to file an income tax return,
you must file Form 8865 separately with the IRS at the
time and place you would be required to file an income
tax return (or, if applicable, a partnership or exempt
organization return). See below for penalties that may
apply if you don’t file Form 8865 on time.

Instructions for Form 8865 (2023)

Gain deferral contribution. A gain deferral contribution
is a contribution of section 721(c) property to a section
721(c) partnership for which the recognition of gain is
deferred under the gain deferral method. See Regulations
section 1.721(c)-1(b)(7).
Gain deferral method. The gain deferral method is the
method described in Regulations section 1.721(c)-3(b)
applied to avoid the immediate recognition of gain upon a
contribution of section 721(c) property to a section 721(c)
partnership under Regulations section 1.721(c)-2(b).

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• A $10,000 penalty is imposed for each tax year of each
foreign partnership for failure to furnish the required
information within the time prescribed. If the information
isn’t filed within 90 days after the IRS has mailed a notice
of the failure to the U.S. person, an additional $10,000
penalty (per foreign partnership) is charged for each
30-day period, or fraction thereof, during which the failure
continues after the 90-day period has expired. The
additional penalty is limited to a maximum of $50,000 for
each failure.
• Any person who fails to furnish all of the information
required within the time prescribed will be subject to a
reduction of 10% of the foreign taxes available for credit
under sections 901 and 960. If the failure continues 90
days or more after the date the IRS mails notice of the
failure, an additional 5% reduction is made for each
3-month period, or fraction thereof, during which the
failure continues after the 90-day period has expired. See
section 6038 (and the underlying regulations) for the
maximum reduction, the exception due to reasonable
cause, and the limits on the amount of these penalties.
• Criminal penalties under sections 7203, 7206, and
7207 may apply for failure to file or for filing false or
fraudulent information.
Additionally, any person that files under the
constructive owners exception may be subject to these
penalties if all the requirements of the exception aren’t
met. Any person required to file Form 8865 who doesn’t
file under the multiple Category 1 filers exception may be
subject to the above penalties if the other person doesn’t
file a correctly completed form and schedules. See
Exceptions to Filing, earlier.

50% interest. A 50% interest in a partnership is an
interest equal to:
• 50% of the capital,
• 50% of the profits, or
• 50% of the deductions or losses.
For purposes of determining a 50% interest, the
constructive ownership rules described below apply.

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10% interest. A 10% interest in a partnership is an
interest equal to:
• 10% of the capital,
• 10% of the profits, or
• 10% of the deductions or losses.
For purposes of determining a 10% interest, the
constructive ownership rules described below apply.

Constructive ownership. For purposes of determining
an interest in a partnership, the constructive ownership
rules of section 267(c) (excluding section 267(c)(3))
apply, taking into account that such rules refer to
corporations and not to partnerships. Generally, an
interest owned directly or indirectly by or for a
corporation, partnership, estate, or trust shall be
considered as being owned proportionately by its owners,
partners, or beneficiaries.
Also, an individual is considered to own an interest
owned directly or indirectly by or for their family. The
family of an individual includes only that individual's
spouse, siblings, ancestors, and lineal descendants. An
interest will be attributed from a nonresident alien
individual under the family attribution rules only if the
person to whom the interest is attributed owns a direct or
indirect interest in the foreign partnership under section
267(c)(1) or (5).

Failure to file information required of Category 3 fil­
ers. Any person that fails to properly report a
contribution to a foreign partnership that is required to be
reported under section 6038B and the regulations under
that section is subject to a penalty equal to 10% of the
fair market value (FMV) of the property at the time of the
contribution. This penalty is subject to a $100,000 limit,
unless the failure is due to intentional disregard. In
addition, the transferor must recognize gain on the
contribution as if the contributed property had been sold
for its FMV. See section 6038B for the exception due to
reasonable cause.

U.S. person. A U.S. person is a citizen or resident of the
United States, a domestic partnership, a domestic
corporation, and any estate or trust that isn’t foreign. See
section 7701(a)(30).
Control of a corporation. For purposes of Schedule N,
control of a corporation is ownership of stock possessing
more than 50% of the total combined voting power, or
more than 50% of the total value of shares of all classes
of stock of the corporation. For rules concerning indirect
ownership and attribution, see Regulations section
1.6038-2(c).

Failure to file information required of Category 4 fil­
ers. Any person who fails to properly report all the
information requested by section 6046A is subject to a
$10,000 penalty, in addition to the section 7203 criminal
penalty, unless it is shown that such failure is due to
reasonable cause. If the failure continues for more than
90 days after the IRS mails notice of the failure, an
additional $10,000 penalty will apply for each 30-day
period (or fraction thereof) during which the failure
continues after the 90-day period has expired. The
additional penalty shall not exceed $50,000.

Change in a proportional interest. A partner's
proportional interest in a foreign partnership can change
as a result of changes in other partners' interests, for
example, when another partner withdraws from the
partnership. A partner's proportional interest can also
change, for example, by operation of the partnership
agreement (for example, if the partnership agreement
provides that a partner's interest in profits will change on
a set date or when the partnership has earned a
specified amount of profits, then the partner's
proportional interest changes when the set date or
specified amount of profits is reached).

Treaty-based return positions. File Form 8833,
Treaty-Based Return Position Disclosure Under Section
6114 or 7701(b), to report a return position that a treaty
of the United States (such as an income tax treaty; an
estate and gift tax treaty; or a friendship, commerce, and
navigation treaty):

Penalties
Failure to timely submit all information required of
Category 1 and 2 filers.

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Instructions for Form 8865 (2023)

• Overrides or modifies any provision of the Internal
Revenue Code, and
• Causes (or potentially causes) a reduction of any tax
incurred at any time.
Failure to make such a report may result in a $1,000
penalty ($10,000 in the case of a C corporation). See
section 6712.

Tax Year
Enter in the space below the title of Form 8865 the tax
year of the foreign partnership that ended with or within
the tax year of the person filing this form. Category 1 or 2
filers must report information for the tax year of the
foreign partnership that ends with or within their tax
years. A Category 3 or 4 filer must report on Schedule O
or P, respectively, transactions that occurred during that
filer's tax year (rather than during the partnership's tax
year).

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Section 6662(j). Penalties may be imposed for
underpayment attributable to undisclosed foreign
financial asset understatements. The term “undisclosed
foreign financial asset” for any tax year includes any
asset for which required information was not provided. An
"undisclosed foreign financial asset understatement"
means for any tax year, the portion of the understatement
for that tax year which is attributable to any transaction
involving an undisclosed foreign financial asset. No
penalty will be imposed for any portion of an
underpayment if the taxpayer can demonstrate that the
failure to comply was due to reasonable cause for such
portion of the underpayment and the taxpayer acted in
good faith for such portion of the underpayment. See
sections 6662(j) and 6664(c) for additional information.

Identifying Numbers and Addresses

Enter the identifying number of the person filing this
return. Use an employer identification number (EIN) to
identify partnerships, corporations, and estates or trusts.
For individuals, use a social security number (SSN) or
other identification number.

Include the suite, room, or other unit number after the
street address. If the post office doesn’t deliver mail to
the street address and the U.S. person has a P.O. box,
show the box number instead.

Foreign address. Enter the information in the following
order: city or town, state or province, and country. Follow
the country's practice for entering the postal code, if any.
Don’t abbreviate the country name.

Failure to comply with a requirement of the gain de­
ferral method. Failure to comply with a requirement of
the gain deferral method, including a failure to comply
with the procedural and reporting requirements imposed
under Regulations sections 1.721(c)-3 and 1.721(c)-6
and section 6038B, may result in an acceleration event
under Regulations section 1.721(c)-4(b)(2) and a penalty
under section 6038B. See the specific instructions for
Schedule G and Schedule H, later.

Item A. Category of Filer

Check the box for each category that describes the
person filing the form. If more than one category applies,
check all boxes that apply. See Categories of Filers,
earlier.

Corrections to Form 8865

Item C

If you file a Form 8865 that you later determine is
incomplete or incorrect, file a corrected Form 8865 with
an amended tax return following the instructions for the
return with which you originally filed Form 8865. Enter
“corrected” at the top of the form and attach a statement
identifying and explaining the changes.

Enter the filer's share of nonrecourse liabilities,
partnership-level qualified nonrecourse financing, and
other liabilities. Nonrecourse liabilities are those liabilities
of the partnership for which no partner bears the
economic risk of loss. The extent to which a partner
bears the economic risk is determined under the rules of
Regulations section 1.752-2.

Specific Instructions

"Qualified nonrecourse financing" generally includes
financing:
• For which no one is personally liable for repayment;
• That is borrowed for use in an activity of holding real
property; and
• That is borrowed from a qualified person (defined in
section 49(a)(1)(D)(iv)) or is lent or guaranteed by a
federal, state, or local government.

Important: All information must be in English. All
amounts must be stated in U.S. dollars.
If the information required in a given section exceeds
the space provided within that section, attach a separate
statement(s) to provide the remaining information, using
the same size and format as the printed forms.
Fill in all applicable lines and schedules. All
categories of filers must complete all items on pages 1
and 2, with three exceptions. Complete item E only if, in
addition to filing the form on your own behalf, you are
reporting information about other Category 1 filers under
the multiple Category 1 filers exception, or you are
reporting information about members of your affiliated
group of corporations under the consolidated return
exception. Only Category 1 and 2 filers are required to
complete item H8. See Exceptions to Filing, earlier.
Answer items H10 and H11 only if you are a Category 1
filer.

Instructions for Form 8865 (2023)

See section 465(b)(6) for more information on qualified
nonrecourse financing.

Item D. Identification of Common Parent
If the person filing the form is a member of a consolidated
group, but not the parent, list the name, address, and EIN
of the filer's common parent.

Item E
Check the item E checkbox only if the Form 8865 filer
also files Form 8938, Statement of Specified Foreign
Financial Assets, for the tax year and includes this form in
the total number of Forms 8865 reported on Form 8938,
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Part IV, line 19. For more information, see the Instructions
for Form 8938, generally, and in particular, Duplicative
reporting and Part IV. Excepted Specified Foreign
Financial Assets.

be used for that foreign partnership on other IRS forms.
However, the foreign partnership's reference ID number
should also be entered on Form 8858, Information Return
of U.S. Persons With Respect to Foreign Disregarded
Entities, if the foreign partnership is listed as a tax owner
of a foreign disregarded entity on Form 8858. See the
instructions for Form 8858, line 3c(2), for more
information.

Item F
Information about certain partners. If you are
reporting information about other persons under the
multiple Category 1 filers exception, or are reporting
information about members of your affiliated group of
corporations under the consolidated return exception
(see Exceptions to Filing, earlier), identify each such
person in item F. List their names, addresses, and
identifying numbers. Also, indicate whether each person
is a Category 1 filer or Category 2 filer, and whether such
person constructively owned an interest in the foreign
partnership during the tax year of the partnership listed at
the top of Form 8865, page 1. See Constructive
ownership, earlier.

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Requirements

The reference ID number that is entered on item G2(b)
must be alphanumeric (defined below) and no special
characters or spaces are permitted. The length of a given
reference ID number is limited to 50 characters.

For these purposes, the term “alphanumeric” means
the entry can be alphabetical, numeric, or any
combination of the two.

The same reference ID number must be used
consistently from tax year to tax year for a given foreign
partnership. If for any reason a reference ID number falls
out of use (for example, the foreign partnership no longer
exists due to disposition or liquidation), the reference ID
number used for that foreign partnership cannot be used
again for another foreign partnership for purposes of
Form 8865 reporting.

Item G1

For the foreign partnership's address, enter the city or
town, the state or province, and the foreign country in that
order. Follow the foreign country's practice in placing the
postal code in the address. Don’t abbreviate the country
name. If the partnership receives its mail in care of a third
party (such as an accountant or attorney), enter “C/O”
followed by the third party's name and street address or
P.O. box.

There are some situations that warrant correlation of a
new reference ID number with a previous reference ID
number when assigning a new reference ID number to a
foreign partnership. For example:
• In the case of a merger or acquisition, a Form 8865
filer must use a reference ID number which correlates the
previous reference ID number with the new reference ID
number assigned to the foreign partnership; or
• In the case of an entity classification election that is
made on behalf of the foreign partnership on Form 8832,
Regulations section 301.6109-1(b)(2)(v) requires the
foreign partnership to have an EIN for this election. For
the first year that Form 8865 is filed after an entity
classification election is made on behalf of the foreign
partnership on Form 8832, the new EIN must be entered
on item G2(a) of Form 8865 and the old reference ID
number must be entered on item G2(b). In subsequent
years, the filer may continue to enter both the EIN on item
G2(a) and the reference ID number on item G2(b), but
must enter at least the EIN on item G2(a).
You must correlate the reference ID numbers as
follows: New reference ID number (space) Old reference
ID number. If there is more than one old reference ID
number, you must enter a space between each such
number. As indicated above, the length of a given
reference ID number is limited to 50 characters and each
number must be alphanumeric and no special characters
are permitted.

Item G2(a)

If the foreign partnership has an EIN, enter it here. Don’t
enter “FOREIGNUS” or “APPLIED FOR.” If the
partnership has no EIN, item G2(b) must be completed.

Item G2(b)
A reference ID number (defined below) is required on
item G2(b) only in cases where no EIN was entered on
item G2(a) for the foreign partnership. However, filers are
permitted to enter both an EIN on item G2(a) and a
reference ID number on item G2(b). If applicable, enter
the reference ID number you have assigned to the foreign
partnership identified on item G1.
A “reference ID number” is a number established by or
on behalf of the U.S. person identified at the top of
page 1 of the form that is assigned to a foreign
partnership for which Form 8865 reporting is required.
These numbers are used to uniquely identify the foreign
partnership in order to keep track of the partnership from
tax year to tax year.
The reference ID number must meet the requirements
below. Don’t enter “FOREIGNUS” or “APPLIED FOR”
with respect to the reference ID number.
Note. Because reference ID numbers are established by
or on behalf of the U.S. person filing Form 8865, there is
no need to apply to the IRS to request a reference ID
number or for permission to use these numbers.

Note. This correlation requirement applies only to the
first year the new reference ID number is used.

Note. Generally, the reference ID number assigned to a
foreign partnership on Form 8865 has relevance only on
Form 8865, its schedules, and any other form that is
attached to or associated with Form 8865, and should not

Item G6. Principal Business Activity Code
If the foreign partnership filed Form 1065. Enter the
business code number (principal business activity code)
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Instructions for Form 8865 (2023)

shown in item C of the Form 1065 filed by the
partnership.

Item H5
Section 267A disallows a deduction for certain interest or
royalty paid or accrued in agreement with a hybrid
arrangement, to the extent that, under the foreign tax law,
there isn’t a corresponding income inclusion (including
long-term deferral). In the case of a filer that is a tax
resident of the United States (for example, a domestic
corporation or citizen of the United States), report in item
H5 the total amount of interest and royalty paid or
accrued by the foreign partnership for which your
distributive share of deductions is disallowed under
section 267A. In the case of a filer that isn’t a tax resident
of the United States (for example, a domestic
partnership), only report in item H5 the portion of your
distributive share of interest and royalty paid or accrued
by the foreign partnership for which you know, or have
reason to know, that one or more of your owners aren’t
allowed a deduction under section 267A. For additional
information about section 267A, including the application
of section 267A in the case of payments by a partnership,
see IRS.gov/businesses/partnerships/faqs-for-form-1065schedule-b-other-information-question-22.

If the foreign partnership did not file Form 1065.
Enter the applicable principal business activity code from
Codes for Principal Business Activity and Principal
Product or Service at the end of these instructions. If the
information necessary to apply the total receipts test is
not available, pick a principal business activity code using
the information you have about the partnership.

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Item G8a. Functional Currency

Enter the foreign partnership's functional currency. See
sections 985 through 989 and the regulations thereunder.
If the partnership had more than one qualified business
unit (QBU), described in Regulations section
1.989(a)-1(b)(2)(ii), attach a statement identifying each
QBU, its country of operation, and its functional currency.
A QBU under Regulations section 1.989(a)-1(b)(2)(ii) is
any separate and clearly identified unit of a trade or
business of the partnership which maintains separate
books and records.
Hyperinflationary exception. A partnership that has a
hyperinflationary currency as its functional currency is
subject to special rules set forth in Regulations section
1.985-3. Generally, under these rules, a partnership must
use the U.S. dollar as its functional currency.

Item H6

Answer “Yes” to item H6 if the partnership is a section
721(c) partnership. If the answer is “Yes,” see the specific
instructions for Schedules G and H, relating to the gain
deferral method, and, if applicable, Schedule O, relating
to the contribution of property during the tax year. See
Section 721(c) partnership, earlier.

Item G8b. Exchange Rate

When translating functional currency to U.S. dollars, you
must use the method specified in sections 985 through
989 and the regulations thereunder. But, regardless of
the specific method required, all exchange rates must be
reported using a “divide-by convention” rounded to at
least four places. That is, the exchange rate must be
reported in terms of the amount by which the functional
currency amount must be divided in order to reflect an
equivalent amount of U.S. dollars. As such, the exchange
rate must be reported as the units of foreign currency that
equal one U.S. dollar, rounded to at least four places.
Don’t report the exchange rate as the number of U.S.
dollars that equals one unit of foreign currency.

Item H8

Note. Only Category 1 and 2 filers are required to
complete item H8.
Enter the number of Forms 8858 attached to Form
8865. A disregarded entity is an entity that is disregarded
as an entity separate from its owner under Regulations
section 301.7701-2(c)(2). The partnership is the tax
owner of the foreign disregarded entity if it is treated as
owning the assets and liabilities of the foreign
disregarded entity for purposes of U.S. income tax law.
If the foreign partnership is the tax owner of a foreign
disregarded entity or operates a foreign branch and you
are a Category 1 or 2 filer of Form 8865, complete and
attach Form 8858 to Form 8865. For more information,
see the Instructions for Form 8858. In addition, if the
foreign partnership is required to attach Form 8858 to
Form 8865, the amounts reported on certain schedules
on Form 8858 must be included in determining the
amounts reported on the equivalent schedules as follows.

Note. You must round the result to more than four places
if failure to do so would materially distort the exchange
rate or the equivalent amount of U.S. dollars.

Item H2
If the foreign partnership was required to file Form 1065
for the partnership's tax year listed at the top of page 1 of
Form 8865, check the applicable box and enter the
Internal Revenue Service Center where the form was or
will be filed (or enter “electronic filing” if the form was or
will be filed electronically). Also, check the applicable
box(es) if the foreign partnership was required to file (for
its tax year) Form 8804, Annual Return for Partnership
Withholding Tax (Section 1446); or (for the calendar year
ending with or within the foreign partnership's tax year)
Form 1042, Annual Withholding Tax Return for U.S.
Source Income of Foreign Persons.

Instructions for Form 8865 (2023)

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IF amounts were reported on
the following Schedule on
Form 8858...

THEN take those amounts into
account (converting from
GAAP to tax as necessary)
when determining the amounts
to be reported on this
Schedule on Form 8865...

Schedule C

Schedule B.

Schedule F

Schedule L.

Schedule J

Section 4, Part III, Schedule K-2.

Schedule M

Schedule N.

Item H12
Check the “Yes” box on item H12a if the filer of this Form
8865 is claiming a deduction under section 250 for
foreign-derived intangible income (FDII), and enter the
amounts requested on items H12b, H12c, and H12d.
Enter U.S. dollar amounts on items H12b, H12c, and
H12d, translated from functional currency at the average
exchange rate for the foreign partnership's tax year (see
section 989(b)).

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The reported amounts should provide information for
transactions between the filer of the Form 8865 and the
foreign partnership. See Form 8993 and its instructions
for information on the section 250 deduction. If no
deduction is being claimed, check the “No” box.

Item H10. Separate Units

Note. Only Category 1 filers (or indirect partners that are
filing the constructive ownership exception statement) are
required to answer items H10a and H10b, if applicable.
Answer "Yes" to item H10a if the filer is a domestic
corporation and (a) the partnership is a hybrid entity; or
(b) the filer, through its interest in the partnership,
indirectly owns an interest in a hybrid entity or indirectly
carries on a business operation outside the United States
that, if carried on by a U.S. person, would constitute a
foreign branch (as defined in Regulations section
1.367(a)-6T(g)(1)). Under Regulations section
1.1503(d)-1(b)(3), a hybrid entity means an entity that
isn’t taxable as an association for U.S. federal tax
purposes, but is subject to an income tax of a foreign
country as a corporation (or otherwise at the entity level)
either on its worldwide income or on a residence basis. If
the answer to item H10a is "No," skip item H10b.
See Regulations section 1.1503(d)-1(b)(4) for more
information on separate units, including information on
when two or more individual separate units are combined
and treated as one separate unit. If you answer “Yes” to
item H10b, then, for each separate unit that has a dual
consolidated loss, attach a statement that sets forth (a)
the identity and country of operation of the separate unit
or, in the case of a combined separate unit, the identity
and country of operation of each individual separate unit
that is treated as part of the combined separate unit; and
(b) the amount of the dual consolidated loss. See
Regulations section 1.1503(d)-5 for rules on determining
the amount of a dual consolidated loss attributable to a
separate unit.

Item H14

Answer “Yes” if at any time during the year there were
transfers between the partnership and its partners
subject to the disclosure requirements of Regulations
section 1.707-8. For certain transfers that are presumed
to be sales, the partnership or the partners must comply
with the disclosure requirements in Regulations section
1.707-8. Generally, disclosure is required when:
1. Certain transfers to a partner are made within 2
years of a transfer of property by the partner to the
partnership;
2. Certain debt is incurred by a partner within 2 years
of the earlier of (a) a written agreement to transfer, or (b)
a transfer of the property that secures the debt, if the
debt is treated as a qualified liability; or
3. Transfers from a partnership to a partner occur
which are the equivalent to those listed in (1) or (2)
above.

The disclosure must be made on the transferor
partner's return using Form 8275, Disclosure Statement,
or on an attached statement providing the same
information. When more than one partner transfers
property to a partnership under a plan, the disclosure
may be made by the partnership rather than each
partner.

Signature
Filer. Don’t sign Form 8865 if you are filing it as an
attachment to your income tax return. Sign the return
only if you are filing Form 8865 separately because you
aren’t required to file a U.S. income tax return. See When
and Where To File, earlier, for more information.

Item H11
Note. Only Category 1 filers are required to answer item
H11.
Answer “Yes” to item H11 if the partnership meets both
of the requirements shown on the form. Total receipts is
defined as the sum of gross receipts or sales
(Schedule B, line 1a); all other income reported on
Schedule B (lines 4 through 7); income reported on
Schedule K, lines 3a, 5, 6a, and 7; income or net gain
reported on Schedule K, lines 8, 9a, 10, and 11; and
income or net gain reported on Form 8825, Rental Real
Estate Income and Expenses of a Partnership or an S
Corporation, lines 2, 19, and 20a.

Paid preparer. Don’t sign Form 8865 or complete the
paid preparer section at the bottom of the form if Form
8865 is filed as an attachment to an income tax return.
Sign Form 8865 and complete the paid preparer section
only if Form 8865 is filed separately.

Schedule A. Constructive Ownership
of Partnership Interest
All filers must complete Schedule A. Check box a if the
person filing the return owns a direct interest in the
foreign partnership. Check box b if the person filing the

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Instructions for Form 8865 (2023)

return constructively owns an interest in the foreign
partnership. See Constructive ownership, earlier.

Percentage interest. Include the foreign partner's
percentage of interest in the partnership's capital and
profits immediately after the gain deferral contribution. If
multiple gain deferral contributions occurred during the
tax year, enter the percentages immediately after the last
gain deferral contribution. See Gain deferral contribution,
earlier.

Category 1 and 2 filers. Category 1 and 2 filers must
list the persons (U.S. and foreign) whose interests in the
foreign partnership they constructively owned during the
partnership’s tax year.
Category 3 filers. Category 3 filers must list the persons
(U.S. and foreign) whose interests in the foreign
partnership they constructively owned during the filer's
tax year that the reportable transfer occurred. See
Schedule A-2. Foreign Partners of Section 721(c)
Partnership, later.

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Schedule A-3. Affiliation Schedule

All filers must complete Schedule A-3. List on
Schedule A-3 all partnerships (foreign or domestic) in
which the foreign partnership owned a direct interest, or a
10% indirect interest (under the rules of sections 267(c)
(1) and (5)) during the partnership tax year listed at the
top of page 1 of Form 8865.

Schedule A-1. Certain Partners of
Foreign Partnership

Category 1 filers. Only Category 1 filers must complete
the Total ordinary income or loss column. In that column,
report the foreign partnership's share of ordinary income
(even if not received) or loss from partnerships in which
the foreign partnership owns a direct interest. The total
amount of ordinary income or loss from each partnership
must also be included on Schedule B, line 4.

All Category 1 and certain Category 3 filers must
complete Schedule A-1. Any person already listed on
Schedule A isn’t required to be listed again on
Schedule A-1.

Category 1 filers. Category 1 filers must list all U.S.
persons who owned at least a 10% direct interest in the
foreign partnership during the partnership's tax year
listed at the top of page 1 of Form 8865.

Schedule B. Income
Statement—Trade or Business
Income

Category 3 filers. Category 3 filers must list:
• Each U.S. person that owned a 10% or greater direct
interest in the foreign partnership during the Category 3
filer's tax year, and
• Any other person related to the Category 3 filer that
was a direct partner in the foreign partnership during that
tax year.
See Regulations section 1.6038B-2(i)(4) for the
definition of a related person.
Exception. Category 3 filers who only transferred cash
and didn’t own a 10% or greater interest in the transferee
partnership after the transfer aren’t required to complete
Schedule A-1.

Important: All Category 1 filers in partnerships engaged
in a domestic or foreign trade or business must complete
Form 8865, Schedule B.
If the partnership is a section 721(c) partnership and
the gain deferral method is applied, Schedule B must
include any remedial items for section 721(c) property,
including an offsetting remedial item relating to
contributed section 197(f)(9) property. See Regulations
sections 1.704-3(d) and 1.704-3(d)(5)(iii). The total net
amount of remedial allocations should be included on
line 7, Other income (loss). Attach a detailed statement
describing the remedial items allocated to each partner
during the tax year for section 721(c) property. See
Regulations section 1.721(c)-3. See Section 721(c)
partnership, Section 721(c) property, and Gain deferral
method, earlier.

Schedule A-2. Foreign Partners of
Section 721(c) Partnership
Schedule A-2 must be completed if (1) item H6 is
answered “Yes” (that the partnership is a section 721(c)
partnership); and (2) during the current tax year, a gain
deferral contribution occurred, or (3) a gain deferral
contribution occurred in a prior tax year (including before
2021) and, during the current tax year, the gain deferral
method is applied to section 721(c) property contributed
in the prior gain deferral contribution. See Section 721(c)
partnership, Gain deferral contribution, and Gain deferral
method, earlier.

Specific Instructions for Schedule B
For specific instructions for Form 8865, Schedule B, use
the instructions for Form 1065, lines 1a through 21
(income and deductions).
You can view or download the Instructions for

TIP Form 1065 at IRS.gov/Form1065. Also, these
instructions can be ordered by calling
800-829-3676 (800-TAX-FORM).

Country of organization. Insert the 2-letter country
code for the country of organization for any foreign
partner, other than an individual. See country codes on
IRS.gov/CountryCodes.

Schedule D. Capital Gains and Losses

Check if related to U.S. transferor. Check the box if the
partner is directly or indirectly related to the U.S.
transferor (within the meaning of section 267(b) or 707(b)
(1)) and isn’t a U.S. person.

Instructions for Form 8865 (2023)

Important: All Form 8865 Category 1 filers in
partnerships having partnership items described in the
Instructions for Schedule D (Form 1065), Capital Gains
and Losses, must complete that schedule.
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You can view or download the Schedule D (Form

If there are more than four reportable section 721(c)
properties, in Parts I through IV, attach a statement using
the same format as in Parts I through IV, listing
properties, or information for properties, in the same
manner as described in the preceding two paragraphs.
For example, the first line on the statement for Part I must
be labeled “5” and contain columns with the same
information as those in Part I, and must list the reportable
section 721(c) property with the fifth-highest FMV. The
statements for Parts I through IV may be combined in a
single attached statement, provided that the format
described above is followed.

TIP 1065) and the Instructions for Schedule D (Form
1065) at IRS.gov/ScheduleD(Form1065). Also,
the form and its instructions can be ordered by calling
800-829-3676 (800-TAX-FORM).

Schedule G (Form 8865). Statement of
Application of the Gain Deferral
Method Under Section 721(c)

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A U.S. transferor uses Schedule G to comply with the
reporting requirements that must be satisfied in applying
the gain deferral method. If the gain deferral method is
applied to section 721(c) property, a U.S. transferor must
file Schedule G for the tax year of a gain deferral
contribution, as well as for each subsequent tax year to
which the gain deferral method is applied to section
721(c) property, even if the gain deferral contribution for
that property occurred before 2018. See Regulations
sections 1.721(c)-6(b)(2) and (3). See Gain deferral
method, Gain deferral contribution, and Section 721(c)
property, earlier.

A U.S. transferor should complete and file only one
Schedule G for each partnership. See U.S. transferor,
earlier.

Part I. Section 721(c) Property

Provide the requested information for each reportable
section 721(c) property. See General Instructions under
Schedule G above for the order in which properties must
be listed and when an attached statement can and must
be used. If there are more than four reportable section
721(c) properties, enter on line 4a the following
information for the reportable section 721(c) properties
listed on the attached statement.
1. In columns 6(a) through 6(c), provide the
aggregate FMV, basis, and built-in gain, respectively, of
the properties.
2. Check the boxes in columns 4, 5, and 7(a)–(e) if
applicable to any of the properties.

Filing Year

Check the box for “Tax year of gain deferral contribution”
if your tax year is a year in which a gain deferral
contribution occurred (a gain deferral contribution year).
Check the “Annual reporting” box if a gain deferral
contribution occurred in a year prior to the current tax
year and, in the current tax year, the gain deferral method
applies to section 721(c) property contributed in the prior
gain deferral contribution (an annual reporting year). If
the tax year is both a gain deferral contribution year and
an annual reporting year, both boxes should be checked.

!

Don’t complete line 4a if there are four or fewer
reportable section 721(c) properties.

CAUTION

Note. Schedule O, Transfer of Property to a Foreign
Partnership, may need to be completed if, during the tax
year, the U.S. transferor contributed property (including
section 721(c) property) to the partnership. See the
Schedule O instructions, later.

General Instructions
On Schedule G, information must be provided for section
721(c) property that was (a) contributed to the
partnership in a gain deferral contribution that occurred
during the current tax year; or (b) contributed to the
partnership in a gain deferral contribution that occurred
during a prior tax year, provided that the gain deferral
method is applied to the property in the current tax year.
Collectively, section 721(c) property for which information
must be reported on Schedule G is referred to as
“reportable section 721(c) properties.” See Section
721(c) property, earlier.

Column 4. Section 197(f)(9) property. Check the box
for the reportable section 721(c) property if the property
is an intangible described in section 197(f)(9).
Column 5. Effectively connected income property.
Check the box for the reportable section 721(c) property
if (a) all distributive shares of income and gain with
respect to the property for all direct and indirect partners
that are related foreign persons for the U.S. transferor will
be subject to taxation as income effectively connected
with a trade or business within the United States (under
section 871 or 882), and (b) neither the section 721(c)
partnership nor a related foreign person that is a direct or
indirect partner in the partnership claims benefits under
an income tax convention that would exempt the income
or gain from tax or reduce the rate of taxation to which
the income or gain is subject. See Regulations sections
1.721(c)-3(b)(1)(ii) and 1.721(c)-6(c)(1).

In Parts I through V, information must be provided on a
property-by-property basis. In Part I, reportable section
721(c) properties and accompanying information must be
listed in descending order of FMV (measured at the time
of contribution). Thus, the reportable section 721(c)
property with the highest FMV should be listed on line 1,
the reportable section 721(c) property with the second
highest FMV should be listed on line 2, and so on.
In Parts II through IV, the line on which information is
provided for a reportable section 721(c) property must
correspond to the line on which the property is listed in
Part I. Thus, in Parts II through IV, line 1 corresponds to
Part I, line 1, and line 2 corresponds to Part I, line 2, and
so on.

Column 6(a). Fair market value. Enter the FMV of the
reportable section 721(c) property, measured as of the
date of contribution.

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Instructions for Form 8865 (2023)

portion of the property immediately before the transfer for
FMV).

Column 6(b). Basis. Enter the adjusted tax basis of the
reportable section 721(c) property on the date of the
contribution. See sections 1011 through 1016 for more
information for the determination of adjusted tax basis.

Part III. Allocation Percentages of Partnership
Items With Respect to Section 721(c) Property

Column 7. Events. Check the box for each of columns
7(a) through 7(e) which describes an event that occurred
during the tax year for the reportable section 721(c)
property. If a box is checked for any reportable section
721(c) property listed, check “Yes” on the corresponding
line in Part V of Schedule G and complete Schedule H.
See the Part V instructions below.

For each reportable section 721(c) property, enter the
percentage of income, gain, deduction, and loss allocated
to the U.S. transferor, related domestic partners, and
related foreign partners. See General Instructions under
Schedule G, earlier, for the order in which properties
must be listed and when an attached statement can and
must be used. See section 267(b) or 707(b)(1) for rules
on determining related partners, and see Regulations
section 1.721(c)-3(c) for a rule requiring that the
partnership apply the consistent allocation method when
the gain deferral method applies.

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Part II. Remaining Built-in Gain, Remedial
Income, and Gain Recognition

Provide the requested information for each reportable
section 721(c) property. See General Instructions under
Schedule G, earlier, for the order in which properties
must be listed and when an attached statement can and
must be used. On line 4a, provide the total amounts in
each column for all reportable section 721(c) property,
including property listed on an attached statement.

Part IV. Allocation of Items to U.S. Transferor
With Respect to Section 721(c) Property

For each reportable section 721(c) property, enter the
amount (both book and tax) of income, gain, deduction,
and loss allocated to the U.S. transferor under the gain
deferral method. See General Instructions under
Schedule G, earlier, for the order in which properties
must be listed and when an attached statement can and
must be used. In addition, a description of any tax item or
regulatory allocation for a reportable section 721(c)
property that is allocated to the U.S. transferor must be
included in Part VI, Supplemental Information.

Column (a). Remaining built-in gain at beginning of
tax year. For a reportable section 721(c) property, enter
the amount of remaining built-in gain at the beginning of
the tax year. If the property was contributed in the current
tax year, enter the property’s built-in gain on the date of
the contribution (Part I, column 6(c)).
Column (b). Remaining built-in gain at end of tax
year. For a reportable section 721(c) property, enter the
amount of remaining built-in gain at the end of the tax
year, figured under the gain deferral method.

Part V. Additional Information

Part V provides questions relating to whether certain
events have occurred in the current tax year for one or
more reportable section 721(c) properties and
information relating to treaty benefits. Such events
include:
• Acceleration events (see Regulations section
1.721(c)-4),
• Partial acceleration events (see Regulations section
1.721(c)-5(d)),
• Termination events (see Regulations section
1.721(c)-5(b)),
• Successor events involving a successor partnership or
U.S. transferor (see Regulations section 1.721(c)-5(c)),
• Taxable disposition of a portion of an interest in a
partnership (see Regulations section 1.721(c)-5(f)), and
• Direct or indirect transfer of section 721(c) property to
a foreign corporation subject to section 367 (see
Regulations section 1.721(c)-5(e)).

Column (c). Remedial income allocated to the U.S.
transferor. For a reportable section 721(c) property,
enter the remedial income allocated to the U.S. transferor
under the remedial allocation method. When the gain
deferral method applies to a section 721(c) property, the
partnership must use the remedial allocation method
described in Regulations section 1.704-3(d) for the
property. See Regulations section 1.721(c)-3(b)(1)(i)(A).
Column (d). Gain recognized due to acceleration
event. For a reportable section 721(c) property, enter the
amount of built-in gain taken into account by reason of an
acceleration event or partial acceleration event. See
Regulations sections 1.721(c)-4 and 1.721(c)-5 for events
constituting an acceleration event or partial acceleration
event and for the consequences of such events.
Column (e). Gain recognized due to section 367
transfer. For a reportable section 721(c) property, enter
the amount of gain recognized by the U.S. transferor
pursuant to Regulations section 1.721(c)-5(e) (regarding
transfers, including indirect transfers, described in section
367 of section 721(c) property to a foreign corporation).
Gain recognized under section 367 should not be
included in column 5. Instead, column 5 should list only
the amount of gain recognized pursuant to Regulations
section 1.721(c)-5(e) (requiring the U.S. transferor to
recognize an amount of gain equal to the remaining
built-in gain (if any) that would have been allocated to the
U.S. transferor if the partnership had sold the remaining

Instructions for Form 8865 (2023)

Lines 1 through 6b. If the answer is “Yes” to any of the
questions on lines 1 through 6b of Part V, also complete
and attach Schedule H (Form 8865). See the separate
instructions later for Schedule H. In addition, the
corresponding checkboxes in Part I, columns 7(a)
through 7(e), should be marked, as applicable.
Line 7a. If the answer is “Yes,” attach to Form 8865 a
copy of the waiver of treaty benefits for the reportable
section 721(c) property. See Regulations sections
1.721(c)-6(b)(2)(iii) and 1.721(c)-6(c).

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section 1.721(c)-4 for rules relating to acceleration
events.
At any time, a U.S. transferor may affirmatively treat an
acceleration event as having occurred (a deemed
acceleration event) for a section 721(c) property by both
recognizing the remaining built-in gain in that section
721(c) property and satisfying the reporting requirements
of the acceleration event. See Regulations section
1.721(c)-4(b)(4).

Part VI. Supplemental Information
Information to be reported. When providing any
information in Part VI, indicate the Part, Part column, and
line for which the information is provided.
Additional Part rows. If an attached statement is used
in Parts I through IV, include the statement “Additional
Section 721(c) Property statement(s) is/are attached” in
the area provided in Part VI.

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Other information. Use the Supplemental Information
section to provide any additional information required by
Regulations section 1.721(c)-6 that isn’t captured in Parts
I through IV above.

Column (b). Provide a description of the acceleration
event, including the citation in the case of a partial or
deemed acceleration event. See Regulations section
1.721(c)-6(b)(3)(iv). Use Part VI if additional space is
needed to describe the transaction.

Schedule H (Form 8865). Acceleration
Events and Exceptions Reporting
Relating to Gain Deferral Method
Under Section 721(c)

Column (d). Enter the amount of the gain recognized by
the U.S. transferor for the section 721(c) property
resulting from the acceleration event.
Column (e). Enter the amount that the section 721(c)
partnership will increase its basis in the section 721(c)
property as a result of the acceleration event. See
Regulations sections 1.721(c)-4(c)(2) and 1.721(c)-5(d)
in the case of a partial acceleration event.

If the gain deferral method is being applied to reportable
section 721(c) property, complete and file Schedule H to
report certain events related to the section 721(c)
property. See Regulations sections 1.721(c)-4 and -5 for
more information. Complete a separate Schedule H for
each partnership.

Column (f). Check the box if there is a partial
acceleration event and the U.S. transferor recognizes a
partial gain for the section 721(c) property. Certain
distributions of other partnership property to a partner
that result in an adjustment under section 734 to the
section 721(c) property constitute a partial acceleration
event requiring that the U.S. transferor recognize gain. If
there is a remaining built-in gain in the section 721(c)
property immediately after the partial acceleration event,
the gain deferral method must continue to apply and the
U.S. transferor is required to continue to report the
information on Schedule G for that property. See
Regulations section 1.721(c)-5(d).

General instructions. Complete all Parts of Schedule H
that correspond to the box or boxes checked in
Schedule G, Part I, column 7, and the related line on Part
V checked “Yes.” If additional lines are needed to report
the information required in Parts I through V, attach a
statement in the same format as the format used in the
Part, in Part VI, Supplemental Information. See Section
721(c) property, earlier.
For Parts I–III and V, enter in column (a) the line
number for the section 721(c) property from Schedule G,
Part I. If the impacted section 721(c) property is listed on
an attached statement to Schedule G, Part I, enter the
line number from the attached statement on which that
property was identified.

Part II. Termination Event
A termination event causes the gain deferral method to
no longer apply for the affected section 721(c) property
on a property-by-property basis. Regulations section
1.721(c)-5(b) identifies the termination events.

Part I. Acceleration Event

Column (b). Provide a description of the termination
event, including the citation to the relevant paragraph in
Regulations section 1.721(c)-5(b). See Regulations
section 1.721(c)-6(b)(3)(v). Use Part VI if additional
space is needed to describe the transaction.

Acceleration event. An acceleration event is any event
that either would reduce the amount of the remaining
built-in gain that a U.S. transferor would have recognized
under the gain deferral method if the event had not
occurred or could defer the recognition of the remaining
built-in gain. Acceleration events are applicable on a
property-by-property basis. An acceleration event
includes the transfer of section 721(c) property by making
a contribution of the property itself to another partnership
or the contribution of an interest in a section 721(c)
partnership to another partnership. When an acceleration
event occurs for a section 721(c) property, the U.S.
transferor must recognize gain in an amount equal to
remaining built-in gain in the property that would have
been allocated to the U.S. transferor if the section 721(c)
partnership had sold the section 721(c) property
immediately before the acceleration event for FMV.
Following the event, the gain deferral method no longer
applies to that section 721(c) property. See Regulations

Part III. Successor Event
A successor event allows for the continued application of
the gain deferral method for the affected section 721(c)
property on a property-by-property basis by a successor
U.S. transferor or a successor section 721(c) partnership.
However, if the successor doesn’t continue the gain
deferral method, the event is an acceleration event and
must be reported in Part I above. Successor events are
applicable on a property-by-property basis. If only a
portion of an interest in a partnership is transferred in a
successor event, the rules of Regulations section
1.704-3(a)(7) are applied to determine the remaining
built-in gain in the section 721(c) property that is
attributable to the portion of the interest that is transferred
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Instructions for Form 8865 (2023)

and the portion that is retained. Regulations section
1.721(c)-5(c) identifies the successor events, including
special rules for transactions involving tiered
partnerships.

properties that is attributable to the portion of the interest
in the section 721(c) partnership that is retained. Attach a
detailed supporting schedule to Schedule H that
separately states each remaining section 721(c) property
and its respective remaining built-in gain allocable to the
U.S. transferor included in the aggregate amount
reported in column (e).

If more than one successor event occurs in the tax
year, provide the required information for each event
separately in Part IV in chronological date order.

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Part V. Section 367 Transfer Event

Column (b). Provide a description of the successor
event, including the citation to the relevant paragraph in
Regulations section 1.721(c)-5(c). See Regulations
section 1.721(c)-6(b)(3)(v). Use Part VI if additional
space is needed to describe the transaction.

Part V reports the information relating to a transfer
described in section 367 of section 721(c) property to a
foreign corporation. See Regulations section
1.721(c)-5(e). Section 367 events include:
• Transfer of section 721(c) property by a section 721(c)
partnership to a foreign corporation, or
• Transfer by a U.S. transferor or a partnership in which a
U.S. transferor is a direct or indirect partner transfers
(directly or indirectly through one or more partnerships)
all or a portion of the section 721(c) partnership that
owns section 721(c) property to a foreign corporation.

Column (d). Enter the identifying information of the
relevant successor, as applicable. In certain successor
events, a domestic corporation becomes the successor
U.S. transferor. In other successor events, a partnership
becomes the successor section 721(c) partnership. A
successor section 721(c) partnership may be a new,
upper-tier, or lower-tier partnership. The identifying
information must include the name, address, and U.S.
taxpayer identification number (TIN), if any, of the
successor U.S. transferor or successor section 721(c)
partnership.

As a result of the section 367 event, the section 721(c)
property is no longer subject to the gain deferral method.
The U.S. transferor is treated as transferring the section
721(c) property to a foreign corporation and is subject to
taxation on the transfer under section 367. See the
section 367 regulations for rules relating to gain or
income recognition under section 367.

Part IV. Taxable Disposition of a Portion of an
Interest in Partnership Event

Part IV reports the information relating to a fully taxable
disposition of a portion of an interest in a section 721(c)
partnership. Complete this Part if a U.S. transferor or a
partnership in which a U.S. transferor is a direct or
indirect partner disposes of (directly or indirectly through
one or more partnerships) a portion of an interest in a
section 721(c) partnership in a transaction in which the
gain or loss, if any, is recognized. This will not be an
acceleration event for the portion of the interest
transferred. The gain deferral method will continue to
apply for the section 721(c) property of the section 721(c)
partnership. The rules of Regulations section 1.704-3(a)
(7) are applied to determine the remaining built-in gain in
the section 721(c) property on a property-by-property
basis that is attributable to the portion of the interest in
the section 721(c) partnership is retained. See
Regulations section 1.721(c)-5(f).

Note. A transfer of property to a foreign corporation by a
U.S. transferor is subject to other reporting requirements
under sections 367, 351, 368, and 6038B (for example,
the filing of Form 926), as applicable. See the related
regulations under these Code sections. Such reporting
requirements are in addition to the filing of Schedule H.

After considering the tax consequences under section
367, the remaining built-in gain, if any, for the section
721(c) property is recognized by the U.S. transferor to the
extent that would have been allocated to the U.S.
transferor had the section 721(c) partnership sold that
portion of the property immediately before the transfer for
FMV.
Column (b). Provide a description of the section 367
transfer, including whether the transfer was a direct or
indirect transfer (through one or more partnerships) of
section 721(c) property to a foreign corporation. If more
than one section 367 transfer occurs in the tax year,
provide the required information for each transfer
separately in Part IV in chronological date order. If
additional space is needed, provide the information in
Part VI.

Column (a). Provide a description of the disposition of
the interest in the partnership, including whether the
interest was a direct or indirect interest (through one or
more partnerships). If more than one taxable disposition
event occurs in the tax year, provide the required
information for each event separately in Part IV in
chronological date order. If additional space is needed,
provide the information in Part VI.

Column (d). Enter the amount of the remaining portion
of built-in gain recognized by the U.S. transferor under
section 721(c). The amount of gain equals the remaining
portion of the built-in gain that would have been allocated
to the U.S. transferor if the section 721(c) partnership had
sold that portion of the section 721(c) property
immediately before the transfer for FMV. This amount
should not include any gain or income recognized by the
U.S. transferor pursuant to section 367 that is reported
elsewhere on the return. See Regulations section
1.721(c)-5(e). After the section 367 transfer, the

Column (c). Enter the percentage of partnership interest
that was disposed of in the event to which all gain or loss,
if any, is recognized.
Column (d). Enter the percentage of the partnership
interest (directly or indirectly through one or more
partnerships) that the U.S. transferor retained
immediately after the event.
Column (e). Enter the aggregate amount of the
remaining built-in gain for all of the section 721(c)
Instructions for Form 8865 (2023)

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transferred section 721(c) property will no longer be
subject to the gain deferral method.

Example. Partner A owns a 45% direct interest in a
foreign partnership (FPS). Partner A also owns 100% of
the stock of a domestic corporation (DC), which owns a
10% direct interest in FPS. Therefore, Partner A is
considered to own a 55% interest in FPS and is thus a
Category 1 filer. When Partner A completes
Schedule K-1 (Form 8865) for itself, Partner A must
report the distributive share of items allocated to Partner
A's direct interest of 45% but not any items allocated to
DC's 10% interest. When Partner A completes
Schedule K-1 (Form 8865) for DC (which Partner A must
do because DC owns a direct 10% interest), Partner A
must report on DC's Schedule K-1 (Form 8865) only
items allocated to DC's direct 10% interest.

Column (e). Enter the identifying information of the
foreign transferee corporation that received the section
721(c) property in the section 367 transfer. The
identifying information includes the name, address, and
U.S.TIN, if any.

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Part VI. Supplemental Information

Information to be reported. When providing any
information in the Supplemental Information, indicate the
Part, Part column, row, and line for which the information
is provided.

Additional Part rows. If additional rows are needed to
enter information in Parts I through V in the Supplemental
Information, provide the information in an attachment or
attachments to Schedule H in the same format as
required for the row on the Part at issue. If separate
supplemental schedules are used for any Part of
Schedule H for specific section 721(c) properties, use the
same corresponding identification line number from the
Part I of Schedule G for such property on the
supplemental schedule for Schedule H.

Although the partnership isn’t subject to income tax,
the partners are liable for tax on their shares of the
partnership income, whether or not distributed, and must
include their share of such items on their tax returns.
Allocations of income, gains, losses, deductions, or
credits among the partners should generally be made
according to the partnership agreement. See section 704
and the regulations thereunder.
Schedule K-1 (Form 8865) for related foreign part­
ners. If the gain deferral method is applied and a
section 721(c) partnership doesn’t have a filing obligation
under section 6031, the U.S. transferor must obtain a
Schedule K-1 (Form 8865) for each direct or indirect
partner that is related to the U.S. transferor (within the
meaning of section 267(b) or 707(b)(1)) and that isn’t a
U.S. person (related foreign partner). See Regulations
section 1.721(c)-6(c)(3). The Schedule K-1 (Form 8865)
for each related foreign partner must be filed and
attached to the Form 8865 as part of the annual reporting
relating to the gain deferral method pursuant to
Regulations section 1.721(c)-6(b)(3)(xi). The instructions
that apply to Schedule K-1 (Form 8865) for all other
partners also apply to a Schedule K-1 (Form 8865) for a
related foreign partner. See Gain deferral method,
Section 721(c) partnership, and U.S. transferor, earlier.

Other information. Use the Supplemental Information
section to provide any additional information required by
Regulations section 1.721(c)-6 that isn’t reported in Parts
I through V above.

Schedules K, Partners' Distributive
Share Items, and K-1 (Form 8865),
Partner’s Share of Income,
Deductions, Credits, etc.
Schedule K

Form 8865, Schedule K, is a summary schedule of all of
the partners' shares of the partnership income, credits,
deductions, etc. Only Category 1 filers must complete
Form 8865, Schedule K.

General Reporting Instructions for Schedule K-1
(Form 8865)

Schedule K-1
Schedule K-1 (Form 8865) is used to report a specific
partner's share of the partnership income, deductions,
credits, etc.

On each Schedule K-1 (Form 8865), enter the
information about the partnership and the partner in Parts
I and II (items A through F). For Schedule K-1 (Form
8865), items E and F, see the instructions for the
corresponding Schedule K-1 (Form 1065), items J and L,
in the Instructions for Form 1065 under Specific
Instructions (Schedule K-1 only). In Part III, enter the
partner's distributive share of each item of income,
deduction, and credit and any other information the
partner needs to prepare the partner's tax return.

All Category 1 and 2 filers must complete
Schedule K-1 (Form 8865) for any direct interest they
hold in the partnership. A Category 1 or 2 filer that
doesn’t own a direct interest is not required to complete
Schedule K-1 (Form 8865).
Category 1 filers must also complete Schedule K-1
(Form 8865) for each U.S. person that directly owns a
10% or greater direct interest in the partnership.

Item A2

Provide the partner's beginning and year-end
percentage interests in partnership profits, losses,
capital, or deductions. These percentages should include
any interest constructively owned by the filer.

Enter the reference ID number used on Form 8865, item
G2(b). For details, see Item G2(b), earlier.
Part III—line 1. If the gain deferral method is applied to
which the section 721(c) partnership adopts the remedial
allocation method, the amounts reflected on each
partner's Schedule K-1 for the allocations of income,

Complete boxes 1 through 21 for any direct interest
that the partner owns in the partnership.
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Instructions for Form 8865 (2023)

gains, losses, deductions, or credits allocated to such
partner must include any allocations of remedial items for
section 721(c) property. See Regulations section
1.721(c)-3(c).
For example, if the partner is the U.S. transferor of
section 721(c) property, Part III, line 1, would include any
remedial income allocated to the U.S. transferor from
Schedule G, Part II, column (c), Remedial income
allocated to U.S. transferor, as applicable. For partners
other than the transferor, Part III, line 1, would include
their share of ordinary business income (or loss) after
taking into account any remedial items to such partner
relating to section 721(c) property. However, Part III,
line 1, would not include basis adjustments attributable to
section 197(f)(9) for related foreign partners. See
Regulations sections 1.704-3(d)(5)(iii) and 1.721(c)-3.
See Section 721(c) partnership, Section 721(c) property,
and Gain deferral method, earlier.

method allocations and gain deferral method, see the
Instructions for Form 1065, especially the Partner's
Instructions for Schedule K-1 (Form 1065).
Line 16. If the partnership had items of international tax
relevance, see the Instructions for Schedules K-2 and K-3
(Form 8865) to determine if you need to check the box
and attach Schedules K-2 and K-3.

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Schedules K-2 (Form 8865), Partners’
Distributive Share
Items—International, and K-3 (Form
8865), Partner’s Share of Income,
Deductions, Credits,
etc.—International
Schedule K-2

Codes. In box 11 and boxes 13 through 21, identify each
item by entering a code in the column to the left of the
dollar amount entry space. These codes are identified in
List of Codes Used for Schedule K-1 (Form 8865), later.
For Box 11—Code ZZ. Other, see Other code ZZ in the
Instructions for Form 1065.

Schedule K-2 (Form 8865) is an extension of Schedule K
of the Form 8865 and is used to report items of
international tax relevance from the operation of a
partnership.

Schedule K-3

Attached statements. When attaching statements to
Schedule K-1 to report additional information to the
partner, indicate there is a statement for the following.
• If an amount can be input on Schedule K-1 but
additional information is required, enter an asterisk (*)
after the code in the column to the left of the entry space.
• For items that can't be reported as a single dollar
amount, enter the code and an asterisk (*) in the column
to the left and enter “STMT” in the right column to
indicate that the information is provided on an attached
statement.
• If the partnership has more coded items than the
number of entry boxes (for example, boxes 11 and 13
through 15, or boxes 17 through 21), don't enter a code
or dollar amount in the last entry box. Instead, enter an
asterisk (*) in the left column and enter “STMT” in the
entry space to the right.
More than one attached statement can be placed on
the same sheet of paper. The information included in the
statement should be identified in alphanumeric order by
box number followed by the letter code (if any),
description, and dollar amount for each item. For
example: “Box 15, code J—Work opportunity
credit—$1,000.” This can be followed with any additional
information the partner needs to determine the proper tax
treatment of the item.

Schedule K-3 (Form 8865) is an extension of
Schedule K-1 (Form 8865) and is generally used to
report the partner’s share of the items reported on
Schedule K-2. The information reported on Schedule K-3
is used to report information on a partner’s tax or
information returns.

For more information, see the Instructions for
Schedules K-2 and K-3 (Form 8865).

Schedule L. Balance Sheets per
Books
The balance sheets should agree with the partnership's
books and records. Attach a statement explaining any
differences.
Only Category 1 filers are required to complete Form
8865, Schedule L.
If you answered "Yes" to item H11 on page 1 of Form
8865, you do not have to complete Form 8865,
Schedule L.
Schedule L requires balance sheets prepared and
translated into U.S. dollars in accordance with U.S.
generally accepted accounting principles (GAAP).
Exception. Generally, if the partnership or any QBU of
the partnership uses the dollar approximate separate
transactions method (DASTM), Form 8865, Schedule L,
should reflect the tax balance sheets prepared and
translated into U.S. dollars according to Regulations
section 1.985-3(d).

Specific Instructions for Schedules K and K-1
For the specific instructions for Form 8865, Schedule K,
and Schedule K-1 (Form 8865), see the Instructions for
Form 1065.
If the partnership is a section 721(c) partnership,
box 20 (code AL—Section 721(c) partnership) of
Schedule K-1, Part III, must include the amounts relating
to any remedial items made under the remedial allocation
method (described in Regulations sections 1.704-3(d)
and 1.704-3(d)(5)(iii)) for section 721(c) property. For the
specific partner's information relating to the remedial
Instructions for Form 8865 (2023)

Specific Instructions for Schedule L
For the specific instructions for Form 8865, Schedule L,
see the Instructions for Form 1065.

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columns (a) through (d). Don’t enter aggregate cash
flows, year-end loan balances, average balances, or net
balances. Don’t include open account balances resulting
from sales and purchases reported under other items
listed on Schedule N that arise and are collected in full in
the ordinary course of business.

Schedule M-1. Reconciliation of
Income (Loss) per Books With Income
(Loss) per Return
Form 8865 filers aren’t required to complete
Schedule M-3 (Form 1065), Net Income (Loss)
Reconciliation for Certain Partnerships.

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Schedule O (Form 8865). Transfer of
Property to a Foreign Partnership

Only Category 1 filers are required to complete Form
8865, Schedule M-1. If you answered "Yes" to item H11
on page 1 of Form 8865, you don’t have to complete
Form 8865, Schedule M-1.

Category 3 filers must complete Schedule O.

Section 721(c) partnerships. Regulations section
1.721(c)-2 overrides section 721(a) nonrecognition of
gain upon a contribution of section 721(c) property to a
section 721(c) partnership occurring on or after August 6,
2015. A U.S. transferor must recognize gain unless the
gain deferral method described in Regulations section
1.721(c)-3 is applied. To satisfy the reporting
requirements of the gain deferral method, the U.S.
transferor is required to report certain information for the
year of the contribution and for subsequent years. See
Regulations section 1.721(c)-6. See Section 721(c)
property, Section 721(c) partnership, U.S. transferor, and
Gain deferral method, earlier.

Specific Instructions for Schedule M-1

For the specific instructions for Schedule M-1 (Form
8865), see the Instructions for Form 1065.

Schedule M-2. Analysis of Partners'
Capital Accounts

Only Category 1 filers are required to complete Form
8865, Schedule M-2. If you answered "Yes" to item H11
on page 1 of Form 8865, you don’t have to complete
Form 8865, Schedule M-2.

Reference ID number. Use the reference ID number
shown on Form 8865, item G2(b). For details, see Item
G2(b), earlier.

Specific Instructions for Schedule M-2

For the specific instructions for Form 8865,
Schedule M-2, see the Instructions for Form 1065.

Part I. Transfers Reportable Under Section
6038B

Schedule N. Transactions Between
Controlled Foreign Partnership and
Partners or Other Related Entities

Part I is used to report the transfer of property to a
foreign partnership in accordance with Regulations
section 1.6038B-2(c). The completion of Part l (related
property transferred to the partnership) is required by
Regulations section 1.6038B-2(c). Provide the
information required in columns (a) through (g) for each
contribution of property to the foreign partnership that
must be reported. If you contributed property with an
FMV greater than its tax basis (appreciated property), or
intangible property, provide the information required in
columns (a) through (g) separately for each item of
property transferred (except to the extent you are allowed
to aggregate the property under Regulations sections
1.704-3(e)(2), (3), and (4)).

All Category 1 filers must complete Schedule N and
report all transactions of the foreign partnership during
the tax year of the partnership listed on the top of Form
8865, page 1. A Category 1 filer filing a Form 8865 for
other Category 1 filers under the multiple Category 1
filers exception must complete a Schedule N for itself and
a separate Schedule N for each Category 1 filer not filing
Form 8865.
Category 2 filers are required to complete columns (a),
(b), and (c) of Schedule N. Category 2 filers don’t have to
complete column (d).

Provide a general description of each item of property
in the Supplemental Information Required To Be
Reported section. For all other property contributed,
aggregate by the categories listed in Part I.

Column (a). Use column (a) to report transactions
between the foreign partnership and the person filing the
Form 8865.
Column (d). Use column (d) to report transactions
between the foreign partnership and any U.S. person with
a 10% or more direct interest in the foreign partnership. If
such person also qualifies under column (b), don’t report
transactions between the foreign partnership and that
person under column (d). Report the transactions only
under column (b).

Column (a). Enter the date of the transfer. If the transfer
was composed of a series of transactions over multiple
dates, enter the date the transfer was completed.
Column (b). Enter the description of the property
transferred.
Column (c). Enter the FMV of the property contributed
(measured as of the date of the transfer).

Lines 6 and 16. Enter distributions received from other
partnerships and distributions from the foreign
partnership for which this form is being completed.

Column (d). Enter your adjusted basis in the property
contributed on the date of the transfer. See sections 1011
through 1016 for more information on the determination
of adjusted basis.

Lines 20 and 21. Enter the largest outstanding balances
during the tax year of gross amounts borrowed from, and
gross amounts lent to, the related parties described in
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Instructions for Form 8865 (2023)

Annual Reporting With Respect to the Gain
Deferral Method

Column (f). If you contributed appreciated property,
enter the method (traditional, traditional with curative
allocations, or remedial) used by the partnership to make
section 704(c) allocations for each item of property. See
Regulations sections 1.704-3(b), (c), and (d) for more
information on these allocation methods. If the gain
deferral method is applied, the remedial method must
generally be used. See Regulations section 1.721(c)-3(b)
(1)(i). For an exception for certain property generating
effectively connected income, see Regulations section
1.721(c)-3(b)(1)(ii).

A U.S. transferor subject to the gain deferral method must
annually attach Schedule G (Form 8865), containing the
information required in Regulations section 1.721(c)-6(b)
(3)(i) through (vii) (and (b)(3)(ix), as applicable). See
Regulations section 1.721(c)-6(b)(3) for further annual
reporting requirements pursuant to the gain deferral
method.

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Part II. Dispositions Reportable Under Section
6038B

Column (g). Enter the amount of gain, if any, recognized
on the transfer. See sections 721(b) and 904(f)(3), and
Regulations section 1.721(c)-2.

Use Part II to report certain dispositions by a foreign
partnership in accordance with Regulations section
1.6038B-2(d). The completion of Part ll (related property
transferred to the partnership) is required by Regulations
section 1.6038B-2(d). If you were required to report a
transfer of appreciated property to the partnership, and
the partnership disposes of the property while you are
still a direct or constructive partner, you must report that
disposition in Part II. If the partnership disposes of the
property in a nonrecognition transaction and receives in
exchange substituted basis property, report the
subsequent disposition of the substituted basis property
in the same manner as provided for the contributed
property. See section 7701(a)(42) for the definition of
substituted basis property and Regulations section
1.704-3(a)(8) for more information.

Line 3. Enter your capital interests, by percentage, in the
partnership immediately before and after the transfer. To
the extent your capital interest in the partnership
immediately before the transfer differs from any of your
profit, loss, or deduction interests in the partnership at
that time, enter in the supplemental information below
your interests, by percentage, in the profit, loss, and
deductions at that time. To the extent your capital interest
in the partnership immediately after the transfer differs
from any of your profit, loss, or deduction interests in the
partnership at that time, enter in the supplemental
information below your interests, by percentage, in the
profit, loss, and deductions at that time.

Supplemental information required to be reported.
Enter any information from Part I that is required to be
reported in greater detail. Identify the applicable column
number next to the information entered in this section. In
addition, if you contributed property to a foreign
partnership as part of a wider transaction, briefly describe
the entire transaction.
Reporting required for the year of contribution to
which the gain deferral method is applied.
Additionally, describe any section 721(c) property
contributed to a section 721(c) partnership and identify
whether the gain deferral method is applied. A U.S.
transferor must attach to Form 8865, for the year of
contribution, Schedule G, containing the information
described in Regulations section 1.721(c)-6(b)(2)(i). See
Regulations section 1.721(c)-6(b) for additional
requirements.
Additional form and statement requirements. In
addition to the reporting requirements above, the
following statements and forms must also be filed to
satisfy the requirements for the gain deferral method.
• Schedule H (Form 8865), if certain events have
occurred.
• Form 8838-P, Consent To Extend the Time To Assess
Tax Pursuant to the Gain Deferral Method (Section
721(c)). See Regulations sections 1.721(c)-6(b)(2)(ii), (b)
(3)(viii), and (b)(5) for more information.
• Copy of “Statement of Waiver of Treaty Benefits under
Section 1.721(c)-6,” if applicable. See Regulations
section 1.721(c)-6(c)(1).

Instructions for Form 8865 (2023)

A disposition by a partnership may be an acceleration
event for purposes of applying the gain deferral method.
The U.S. transferor may be required to recognize gain in
an amount equal to the remaining built-in gain on the
section 721(c) property previously contributed to the
section 721(c) partnership. See Regulations section
1.721(c)-4. For acceleration event exceptions, see
Regulations section 1.721(c)-5. Acceleration events and
exceptions to an acceleration event should be reflected
on Part II. In addition, Schedules G and H are required to
be filed.

Column (a). Provide a brief description of the property
disposed of by the partnership. If you are reporting the
disposition of substituted basis property received by the
partnership in a nonrecognition transaction in exchange
for appreciated property contributed by you, enter “See
Attached” and attach a statement providing brief
descriptions of both the property contributed by you to
the partnership and the substituted basis property
received by the partnership in exchange for that property.
Column (b). Enter the date that you transferred this
property to the partnership. If you are reporting the
disposition of substituted basis property received by the
partnership in a nonrecognition transaction in exchange
for property previously contributed by you, enter “See
Attached” and attach a statement showing both the date
you transferred the appreciated property to the
partnership and the date the partnership exchanged the
property for substituted basis property in a
nonrecognition transaction. See Regulations section
1.6038B-2.

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Column (c). Enter the date that the partnership disposed
of the property.

Column (a). If you acquired the interest in the foreign
partnership by purchase, gift, or inheritance, or in a
distribution from a trust, estate, partnership, or
corporation, enter the name, address, and identifying
number (if any) of the person from whom you acquired
the interest.

Column (d). Briefly describe how the partnership
disposed of the property (for example, by sale or
exchange).
Column (e). Enter the amount of gain, if any, recognized
by the partnership on the disposition of property.

Column (b). Enter the date of the acquisition. If the
acquisition was composed of a series of transactions
over multiple dates, enter the date the acquisition was
completed.

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Column (f). Enter the amount of depreciation recapture,
if any, recognized by the partnership on the disposition of
property. See Regulations sections 1.1245-1(e) and
1.1250-1(f).

Column (c). Enter the FMV of the interest you acquired
in the partnership (measured as of the date of
acquisition).

Column (g). Enter the amount of gain from column (e)
allocated to you.

Column (d). Enter your basis in the acquired partnership
interest (measured as of the date of acquisition). See
sections 722 and 742.

Column (h). Enter the amount of depreciation recapture
from column (f) allocated to you. See Regulations
sections 1.1245-1(e) and 1.1250-1(f). If you recognize
any section 1254 recapture on the partnership's
disposition of natural resource recapture property, enter
“See Attached” and attach a statement figuring the
amount of recapture. See Regulations section 1.1254-5.

Columns (e) and (f). Enter your total direct percentage
interest in the partnership both before and immediately
after the acquisition. To the extent your direct percentage
interest in the partnership differs among capital, profits,
losses, or deductions, enter “See Below” and state the
different percentages in Part IV.

Part III. Gain Recognition Under Section 904(f)(3)
or (f)(5)(F)

Part II. Dispositions

If gain recognition was required for any transfer reported
in Part I under section 904(f)(3) or (f)(5)(F), attach a
statement identifying the transfer and the amount of gain
recognized.

This section is completed by U.S. persons who are
Category 4 filers because they disposed of an interest in
a foreign partnership. See Categories of Filers, earlier, for
more details about what types of dispositions must be
reported. For each disposition reported in Part II, indicate
in Part IV whether a statement is required by Regulations
section 1.751-1(a)(3) to be filed for the disposition.

Schedule P (Form 8865). Acquisitions,
Dispositions, and Changes of
Interests in a Foreign Partnership

A disposition of a section 721(c) partnership interest
may be an acceleration event for purposes of applying
the gain deferral method. The U.S. transferor may be
required to recognize gain in an amount equal to the
remaining built-in gain on the section 721(c) property
previously contributed to the section 721(c) partnership.
In this case, Schedule H must also be filed. See
Regulations section 1.721(c)-4. For acceleration event
exceptions, see Regulations section 1.721(c)-5.

Use Schedule P to report the acquisition, disposition, and
change of interest in a foreign partnership.
Every Category 4 filer must complete Schedule P,
unless they qualify under the exception for certain
Category 4 filers, described earlier.
Reference ID number. Use the reference ID number
shown on Form 8865, item G2(b). For details, see Item
G2(b), earlier.

Column (a). Unless you disposed of the interest by
withdrawing, in whole or in part, from the partnership,
enter the name, address, and identifying number (if any)
of the person to whom you transferred the interest in the
foreign partnership.

Part I. Acquisitions
Part I is completed by Category 4 filers required to report
an acquisition of an interest in a foreign partnership. See
Categories of Filers, earlier, for more details about which
types of acquisitions must be reported.

Column (b). Enter the date of the disposition. If the
disposition was composed of a series of transactions
over multiple dates, enter the date the disposition was
completed.

An acquisition of a section 721(c) partnership interest
may be an acceleration event exception under the gain
deferral method. In such case, Schedule H is required to
be filed. See Regulations section 1.721(c)-5. In this case,
the acquirer may become a successor U.S. transferor and
may have a reporting requirement under Regulations
section 1.721(c)-6. As a result, the successor U.S.
transferor is required to file Schedule G as well as, if
certain events occur, Schedule H. See Section 721(c)
partnership, Gain deferral method, and U.S. transferor,
earlier.

Column (c). Enter the FMV of the interest you disposed
of in the partnership (measured as of the date of
disposition). If you recognized gain or loss on the
disposition, state the amount of gain or loss in Part IV.
See section 741.
Column (d). Enter your adjusted basis in the partnership
interest disposed of immediately before the disposition.
See section 705.
Columns (e) and (f). Enter your total direct percentage
interest in the partnership both before and immediately
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Instructions for Form 8865 (2023)

after the disposition. To the extent your percentage
interest in the partnership differs among capital, profits,
losses, or deductions, enter “See Below” and state the
different percentages in Part IV.

Column (d). Enter your basis in your partnership interest
immediately before the change.
Columns (e) and (f). Enter your direct percentage
interest in the partnership both before and immediately
after the change. To the extent your percentage interest
in the partnership differs among capital, profits, losses, or
deductions, enter “See Below” and state the different
percentages in Part IV.

Part III. Change in Proportional Interest
This section is completed by U.S. persons who are
Category 4 filers because their direct proportional interest
in the foreign partnership changed. See Categories of
Filers, earlier, for more details about which changes in
proportional interest must be reported.

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Part IV. Supplemental Information Required
To Be Reported

Column (a). Briefly describe the event that caused your
interest in the partnership to change (for example, the
admission of a new partner).

Enter any information asked for in Part I, Part II, or Part III
that must be reported in detail. Identify the applicable
part number and column next to the information entered
in Part IV.

Column (b). Enter the date of the change. If the change
resulted from a series of transactions over multiple dates,
enter the date the change was completed.
Column (c). Enter the FMV of your interest in the
partnership immediately before the change.

Privacy Act and Paperwork Reduction Act Notice. We ask for the information on this form and its schedules to carry
out the Internal Revenue laws of the United States. We need this information to ensure that you are complying with the
revenue laws and to allow us to figure and collect the right amount of tax. Sections 6038, 6038B, 6038D, and 6046A
require you to provide this information. Section 6038D requires specified individuals and, upon issuance of regulations,
specified domestic entities to report specified foreign financial assets in which they have an interest. Form 8938 is
generally used to comply with this reporting requirement, but if you checked the box on Form 8865, item E, you're
choosing to use Form 8865 (in conjunction with Form 8938) to report your interests. Section 6109 requires you to
provide your identification number. Failure to provide all of the requested information in a timely manner or providing
false information may subject you to penalties.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be
retained as long as their contents may become material in the administration of any Internal Revenue law. Generally,
tax returns and return information are confidential, as required by section 6103. However, section 6103 allows or
requires the IRS to disclose or give such information to the Department of Justice for civil and criminal litigation, and to
cities, states, the District of Columbia, and U.S. commonwealths and territories for use in administering their tax laws.
We may also disclose this information to other countries under a tax treaty, to federal and state agencies to enforce
federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism.
The time needed to complete and file this form and related schedules will vary depending on individual
circumstances. The estimated burden for individual and business taxpayers filing this form is approved under OMB
control number 1545-0074 and 1545-0123 and is included in the estimates shown in the instructions for their individual
and business income tax return. The estimated burden for all other taxpayers who file this form is shown below.
Learning about the law
or the form

39 hr., 30 min.
13 hr., 52 min.
7 hr., 53 min.
12 hr., 12 min.
170 hr., 16 min.
171 hr., 13 min.
16 hr., 15 min.
5 hr., 44 min.

6 hr., 47 min.
3 hr., 34 min.
2 hr., 17 min.
7 hr., 31 min.
34 hr., 28 min.
35 hr., 33 min.
5 hr., 10 min.
1 hr., 12 min.

Preparing, copying, assembling,
and sending the form to the IRS

8865
Schedule G (Form 8865)
Schedule H (Form 8865)
Schedule K-1 (Form 8865)
Schedule K-2 (Form 8865)
Schedule K-3 (Form 8865)
Schedule O (Form 8865)
Schedule P (Form 8865)

.

Recordkeeping

.

Form

14 hr., 21 min.
3 hr., 57 min.
2 hr., 30 min.
9 hr., 14 min.
50 hr., 44 min.
51 hr., 53 min.
5 hr., 39 min.
1 hr., 20 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form and
related schedules simpler, we would be happy to hear from you. You can send us comments through IRS.gov/
FormComments. Or you can send your comments to the Internal Revenue Service, Tax Forms and Publications, 1111
Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send Form 8865 to this address. Instead, see When
and Where To File, earlier.

Instructions for Form 8865 (2023)

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List of Codes Used for Schedule K-1 (Form 8865)

Where to report or where to find further reporting information.

Box Number / Item
1. Ordinary business income (loss). Determine whether the income (loss)
is passive or nonpassive and enter on your return as follows.
Passive loss

See Partner’s Instr. (Form 1065)

Passive income

Schedule E (Form 1040), line 28, column (h)

Nonpassive loss

See Partner’s Instr. (Form 1065)

Nonpassive income

Schedule E (Form 1040), line 28, column (k)

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See Partner’s Instr. (Form 1065)

2. Net rental real estate income (loss)
3. Other net rental income (loss)
Net income

Schedule E (Form 1040), line 28, column (h)

Net loss

See Partner’s Instr. (Form 1065)

4a. Guaranteed payment services

See Partner’s Instr. (Form 1065)

4b. Guaranteed payment capital

See Partner’s Instr. (Form 1065)

4c. Guaranteed payment total

See Partner’s Instr. (Form 1065)

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 Partner’s Instr. (Form 1065)

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 Partner’s Instr. (Form 1065)

10. Net section 1231 gain (loss)

See Partner’s Instr. (Form 1065)

11. Other income (loss)
Code A. Other portfolio income (loss)

See Partner’s Instr. (Form 1065)

Code B. Involuntary conversions

See Partner’s Instr. (Form 1065)

Code C. Section 1256 contracts & straddles

Form 6781, line 1

Code D. Mining exploration costs recapture

See Pub. 535

Code E. Cancellation of debt

Schedule 1 (Form 1040), line 8c; or Form 982

Code F. Section 743(b) positive income adjustments

See Partner’s Instr. (Form 1065)

Code G. Reserved for future use
Code H. Section 951 income inclusions
Code I. Gain (loss) from disposition of oil, gas, thermal, or other
mineral properties (section 59(e))
Code J. Recoveries of tax benefit items
Code K. Gambling gains and losses
Code L. Any income, gain, or loss to the partnership from a
distribution under section 751(b) (certain distributions treated as
sales or exchanges)
Code M. Gain eligible for section 1045 rollover (replacement stock
purchased by partnership)
Code N. Gain eligible for section 1045 rollover (replacement stock
not purchased by partnership)
Code O. Sale or exchange of QSB stock with section 1202
exclusion
Code P. Gain or loss on disposition of farm recapture property and
other items to which section 1252 applies
Code Q. Gain or loss on Fannie Mae or Freddie Mac qualified
preferred stock
Code R. Specially allocated ordinary gain (loss)

-22-

See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)

See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)

Instructions for Form 8865 (2023)

Where to report or where to find further reporting information.
See Partner’s Instr. (Form 1065)

Box Number / Item
Code S. Non-portfolio capital gain (loss)
Codes T through X. Reserved for future use
Code ZZ. Other
12. Section 179 deduction

See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)

TREASURY/IRS
AND OMB USE
ONLY DRAFT
December 6, 2023

13. Other deductions

Code A. Cash contributions (60%)

See Partner’s Instr. (Form 1065)

Code B. Cash contributions (30%)

See Partner’s Instr. (Form 1065)

Code C. Noncash contributions (50%)

See Partner’s Instr. (Form 1065)

Code D. Noncash contributions (30%)

See Partner’s Instr. (Form 1065)

Code E. Capital gain property to a 50% organization (30%)

See Partner’s Instr. (Form 1065)

Code F. Capital gain property (20%)

See Partner’s Instr. (Form 1065)

Code G. Contributions (100%)

See Partner’s Instr. (Form 1065)

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 Partner’s Instr. (Form 1065)

Code K. Excess business interest expense

See Partner’s Instr. (Form 1065)

Code L. Deductions—portfolio (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 Partner’s Instr. (Form 1065)

Code O. Dependent care benefits

Form 2441, line 12

Code P. Preproductive period expenses

See Partner’s Instr. (Form 1065)

Code Q. Reserved for future use
Code R. Pensions and IRAs

See Partner’s Instr. (Form 1065)

Code S. Reforestation expense deduction

See Partner’s Instr. (Form 1065)

Codes T through U. Reserved for future use
Code V. Section 743(b) negative income adjustments

See Partner’s Instr. (Form 1065)

Code W. Soil and water conservation

See Partner’s Instr. (Form 1065)

Code X. Film, television, and theatrical production expenditures
Code Y. Expenditures for removal of barriers
Code Z. Itemized deductions
Code AA. Contributions to a capital construction fund (CCF)
Code AB. Penalty on early withdrawal of savings
Code AC. Interest expense allocated to debt-financed distributions
Code AD. Interest expense on working interest in oil or gas
Code AE. Deductions—portfolio income
Codes AF through AJ. Reserved for future use
Code ZZ. Other
14. Self-employment earnings (loss)

See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)

Note. If you have a section 179 deduction or any partner-level
deductions, see the Partner’s Instr. (Form 1065) before completing
Schedule SE (Form 1040).
Code A. Net earnings (loss) from self-employment

Schedule SE, Section A or B

Code B. Gross farming or fishing income

See Partner’s Instr. (Form 1065)

Code C. Gross non-farm income

See Partner’s Instr. (Form 1065)

15. Credits
Code A. Reserved for future use
Code B. Reserved for future use
See Partner’s Instr. (Form 1065)

Code C. Low-income housing credit (section 42(j)(5)) from
post-2007 buildings

Instructions for Form 8865 (2023)

-23-

Where to report or where to find further reporting information.

Box Number / Item
Code D. Low-income housing credit (other) from post-2007
buildings

See Partner’s Instr. (Form 1065)

Code E. Qualified rehabilitation expenditures (rental real estate)

See Partner’s Instr. (Form 1065)

Code F. Other rental real estate credits

See Partner’s Instr. (Form 1065)

Code G. Other rental credits

See Partner’s Instr. (Form 1065)

Code H. Undistributed capital gains credit

See Partner’s Instr. (Form 1065)

Code I. Biofuel producer credit

See Partner’s Instr. (Form 1065)

Code J. Work opportunity credit

See Partner’s Instr. (Form 1065)

Code K. Disabled access credit

See Partner’s Instr. (Form 1065)

Code L. Empowerment zone employment credit

See Partner’s Instr. (Form 1065)

Code M. Credit for increasing research activities

See Partner’s Instr. (Form 1065)

Code N. Credit for employer social security and Medicare taxes

See Partner’s Instr. (Form 1065)

Code O. Backup withholding

See Partner’s Instr. (Form 1065)

Code P. Unused investment credit from the qualifying advanced
coal project credit or qualifying gasification project credit allocated
from cooperatives

See Partner’s Instr. (Form 1065)

Code Q. Unused investment credit from the qualifying advanced
energy project credit allocated from cooperatives
Code R. Unused investment credit from the advanced
manufacturing investment credit allocated from cooperatives
Code S. Reserved for future use
Code T. Unused investment credit from the energy credit allocated
from cooperatives
Code U. Unused investment credit from the rehabilitation credit
allocated from cooperatives
Code V. Advanced manufacturing production credit
Codes W and X. Reserved for future use
Code Y. Clean hydrogen production credit
Code Z. Orphan drug credit
Code AA. Enhanced oil recovery credit
Code AB. Renewable electricity production credit
Code AC. Biodiesel, renewable diesel, or sustainable aviation fuels
credit
Code AD. New markets credit
Code AE. Credit for small employer pension plan startup costs
Code AF. Credit for small employer auto-enrollment
Code AG. Credit for small employer military spouse retirement plan
eligibility
Code AH. Credit for employer-provided childcare facilities and
services
Code AI. Low sulfur diesel fuel production credit
Code AJ. Qualified railroad track maintenance credit
Code AK. Credit for oil and gas production from marginal wells
Code AL. Distilled spirits credit
Code AM. Energy efficient home credit
Code AN. Alternative motor vehicle credit
Code AO. Alternative fuel vehicle refueling property credit
Code AP. Clean renewable energy bond credit
Code AQ. New clean renewable energy bond credit
Code AR. Qualified energy conservation bond credit
Code AS. Qualified zone academy bond credit
Code AT. Qualified school construction bond credit
Code AU. Build America bond credit
Code AV. Credit for employer differential wage payments
Code AW. Carbon oxide sequestration credit
Code AX. Carbon oxide sequestration credit recapture

See Partner’s Instr. (Form 1065)

TREASURY/IRS
AND OMB USE
ONLY DRAFT
December 6, 2023

-24-

See Partner’s Instr. (Form 1065)

See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)

Instructions for Form 8865 (2023)

Box Number / Item
Code AY. New clean vehicle credit
Code AZ. Qualified commercial clean vehicle credit
Code BA. Credit for small employer health insurance premiums
Code BB. Employer credit for paid family and medical leave
Code BC. Eligible credits from transferor(s) under section 6418
Codes BD through BG. Reserved for future use
Code ZZ. Other
17. Alternative minimum tax (AMT) items

Where to report or where to find further reporting information.
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)

TREASURY/IRS
AND OMB USE
ONLY DRAFT
December 6, 2023
See Partner’s Instr. (Form 1065)

Code A. Post-1986 depreciation adjustment

See Partner’s Instr. (Form 1065) and the Instructions for Form 6251

Code B. Adjusted gain or loss

See Partner’s Instr. (Form 1065) and the Instructions for Form 6251

Code C. Depletion (other than oil & gas)

See Partner’s Instr. (Form 1065) and the Instructions for Form 6251

Code D. Oil, gas, and geothermal—gross income

See Partner’s Instr. (Form 1065) and the Instructions for Form 6251

Code E. Oil, gas, and geothermal—deductions

See Partner’s Instr. (Form 1065) and the Instructions for Form 6251

Code F. Other AMT items

See Partner’s Instr. (Form 1065) and the Instructions for Form 6251

18. Tax-exempt income and nondeductible expenses
Code A. Tax-exempt interest income

Form 1040, line 2a

Code B. Other tax-exempt income

See Partner’s Instr. (Form 1065)

Code C. Nondeductible expenses

See Partner’s Instr. (Form 1065)

19. Distributions

Code A. Cash and marketable securities

See Partner’s Instr. (Form 1065)

Code B. Distribution subject to section 737

See Partner’s Instr. (Form 1065)

Code C. Other property

See Partner’s Instr. (Form 1065)

20. Other information

Code A. Investment income

Form 4952, line 4a

Code B. Investment expenses

Form 4952, line 5

Code C. Fuel tax credit information

Form 4136

Code D. Qualified rehabilitation expenditures (other than rental real See Partner’s Instr. (Form 1065)
estate)
Code E. Basis of energy property

See Partner’s Instr. (Form 1065)

Codes F through G. Recapture of low-income housing credit

See Partner’s Instr. (Form 1065)

Code H. Recapture of investment credit

See Form 4255

Code I. Recapture of other credits

See Partner’s Instr. (Form 1065)

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 Partner’s Instr. (Form 1065)

Code M. Recapture of section 179 deduction

See Partner’s Instr. (Form 1065)

Code N. Business interest expense (information item)

See Partner’s Instr. (Form 1065)

Code O. Section 453(I)(3) information

See Partner’s Instr. (Form 1065)

Code P. Section 453A(c) information
Code Q. Section 1260(b) information
Code R. Interest allocable to production expenditures
Code S. Capital construction fund (CCF) nonqualified withdrawals
Code T. Depletion information—oil and gas
Code U. Section 743(b) basis adjustment
Code V. Unrelated business taxable income
Code X. Reserved for future use
Code Y. Net investment income
Code Z. Section 199A information

See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)

Code AA. Section 704(c) information

See Partner’s Instr. (Form 1065)

Code AB. Section 751 gain (loss)

See Partner’s Instr. (Form 1065)

Instructions for Form 8865 (2023)

-25-

See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)

Where to report or where to find further reporting information.

Box Number / Item
Code AC. Section 1(h)(5) gain (loss)

See Partner’s Instr. (Form 1065)

Code AD. Deemed section 1250 unrecaptured gain

See Partner’s Instr. (Form 1065)

Code AE. Excess taxable income

See Partner’s Instr. (Form 1065)

Code AF. Excess business interest income

See Partner’s Instr. (Form 1065)

Code AG. Gross receipts for section 448(c) (information item)

See Partner’s Instr. (Form 1065)

Code AH. Noncash charitable contributions
Code AI. Interest and tax on deferred compensation to partners
Code AJ. Excess business loss limitation
Code AK. Gain from mark-to-market election
Code AL. Section 721(c) partnership
Code AM. Section 1061 information
Code AN. Farming and fishing business
Code AO. PTP information
Code AP. Inversion gain
Code AQ. Conservation reserve program payments
Code AR. IRA disclosure
Code AS. Qualifying advanced coal project property and qualifying
gasification project property
Code AT. Qualifying advanced energy project property
Code AU. Advanced manufacturing investment property
Code AV. Reserved for future use
Code AW. Reportable transactions
Code AX. Reserved for future use
Code AY. Foreign partners, Form 8990, Schedule A
Codes AZ through BD. Reserved for future use
Code ZZ. Other

See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)

TREASURY/IRS
AND OMB USE
ONLY DRAFT
December 6, 2023

-26-

See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)
See Partner’s Instr. (Form 1065)

Instructions for Form 8865 (2023)

Codes for Principal Business Activity
and Principal Product or Service
This list of Principal Business Activities and their
associated codes is designed to classify an
enterprise by the type of activity in which it is
engaged to facilitate the administration of the
Internal Revenue Code. These Principal Business
Activity Codes are based on the North American
Industry Classification System.

Using the list of activities and codes below,
determine from which activity the business
derives the largest percentage of its “total
receipts.” Total receipts is defined as the sum of
gross receipts or sales (Schedule B, line 1a); all
other income reported on Schedule B, lines 4
through 7; income reported on Schedule K, lines
3a, 5, 6a, and 7; income or net gain reported on
Schedule K, lines 8, 9a, 10, and 11; and income
or net gain reported on Form 8825, lines 2, 19,
and 20a. If the business purchases raw materials

and supplies them to a subcontractor to produce
the finished product, but retains title to the
product, the business is considered a
manufacturer and must use one of the
manufacturing codes (311110–339900).
Once the Principal Business Activity is
determined, enter the six-digit code from the list
below on page 1, item H7. Also enter a brief
description of the business activity in item H8.

TREASURY/IRS
AND OMB USE
ONLY DRAFT
December 6, 2023

Agriculture, Forestry, Fishing,
and Hunting

Crop Production
111100 Oilseed & Grain Farming
111210 Vegetable & Melon Farming
(including potatoes & yams)
111300 Fruit & Tree Nut Farming
111400 Greenhouse, Nursery, &
Floriculture Production
111900 Other Crop Farming
(including tobacco, cotton,
sugarcane, hay, peanut,
sugar beet, & all other crop
farming)
Animal Production
112111 Beef Cattle Ranching &
Farming
112112 Cattle Feedlots
112120 Dairy Cattle & Milk
Production
112210 Hog & Pig Farming
112300 Poultry & Egg Production
112400 Sheep & Goat Farming
112510 Aquaculture (including
shellfish & finfish farms &
hatcheries)
112900 Other Animal Production
Forestry and Logging
113110 Timber Tract Operations
113210 Forest Nurseries & Gathering
of Forest Products
113310 Logging
Fishing, Hunting, and Trapping
114110 Fishing
114210 Hunting & Trapping
Support Activities for Agriculture
and Forestry
115110 Support Activities for Crop
Production (including cotton
ginning, soil preparation,
planting, & cultivating)
115210 Support Activities for Animal
Production (including
Farriers)
115310 Support Activities for Forestry

Mining
211120
211130
212110
212200
212310
212320

Crude Petroleum Extraction
Natural Gas Extraction
Coal Mining
Metal Ore Mining
Stone Mining & Quarrying
Sand, Gravel, Clay, &
Ceramic & Refractory
Minerals Mining & Quarrying
212390 Other Nonmetallic Mineral
Mining & Quarrying
213110 Support Activities for Mining

Utilities
221100 Electric Power Generation,
Transmission, & Distribution
221210 Natural Gas Distribution
221300 Water, Sewage, & Other
Systems
221500 Combination Gas & Electric

Construction
Construction of Buildings
236110 Residential Building
Construction
236200 Nonresidential Building
Construction
Heavy and Civil Engineering
Construction
237100 Utility System Construction

237210 Land Subdivision
237310 Highway, Street, & Bridge
Construction
237990 Other Heavy & Civil
Engineering Construction
Specialty Trade Contractors
238100 Foundation, Structure, &
Building Exterior Contractors
(including framing carpentry,
masonry, glass, roofing, &
siding)
238210 Electrical Contractors
238220 Plumbing, Heating, &
Air-Conditioning Contractors
238290 Other Building Equipment
Contractors
238300 Building Finishing
Contractors (including
drywall, insulation, painting,
wallcovering, flooring, tile, &
finish carpentry)
238900 Other Specialty Trade
Contractors (including site
preparation)

Manufacturing

Food Manufacturing
311110 Animal Food Mfg
311200 Grain & Oilseed Milling
311300 Sugar & Confectionery
Product Mfg
311400 Fruit & Vegetable Preserving
& Specialty Food Mfg
311500 Dairy Product Mfg
311610 Animal Slaughtering and
Processing
311710 Seafood Product Preparation
& Packaging
311800 Bakeries, Tortilla & Dry Pasta
Mfg
311900 Other Food Mfg (including
coffee, tea, flavorings, &
seasonings)
Beverage and Tobacco Product
Manufacturing
312110 Soft Drink & Ice Mfg
312120 Breweries
312130 Wineries
312140 Distilleries
312200 Tobacco Manufacturing
Textile Mills and Textile Product
Mills
313000 Textile Mills
314000 Textile Product Mills
Apparel Manufacturing
315100 Apparel Knitting Mills
315210 Cut & Sew Apparel
Contractors
315250 Cut & Sew Apparel Mfg
(except Contractors)
315990 Apparel Accessories & Other
Apparel Mfg
Leather and Allied Product
Manufacturing
316110 Leather & Hide Tanning &
Finishing
316210 Footwear Mfg (including
rubber & plastics)
316990 Other Leather & Allied
Product Mfg
Wood Product Manufacturing
321110 Sawmills & Wood
Preservation
321210 Veneer, Plywood, &
Engineered Wood Product
Mfg
321900 Other Wood Product Mfg

Paper Manufacturing
322100 Pulp, Paper, & Paperboard
Mills
322200 Converted Paper Product
Mfg
Printing and Related Support
Activities
323100 Printing & Related Support
Activities
Petroleum and Coal Products
Manufacturing
324110 Petroleum Refineries
(including integrated)
324120 Asphalt Paving, Roofing, &
Saturated Materials Mfg
324190 Other Petroleum & Coal
Products Mfg
Chemical Manufacturing
325100 Basic Chemical Mfg
325200 Resin, Synthetic Rubber, &
Artificial & Synthetic Fibers &
Filaments Mfg
325300 Pesticide, Fertilizer, & Other
Agricultural Chemical Mfg
325410 Pharmaceutical & Medicine
Mfg
325500 Paint, Coating, & Adhesive
Mfg
325600 Soap, Cleaning Compound,
& Toilet Preparation Mfg
325900 Other Chemical Product &
Preparation Mfg
Plastics and Rubber Products
Manufacturing
326100 Plastics Product Mfg
326200 Rubber Product Mfg
Nonmetallic Mineral Product
Manufacturing
327100 Clay Product & Refractory
Mfg
327210 Glass & Glass Product Mfg
327300 Cement & Concrete Product
Mfg
327400 Lime & Gypsum Product Mfg
327900 Other Nonmetallic Mineral
Product Mfg
Primary Metal Manufacturing
331110 Iron & Steel Mills & Ferroalloy
Mfg
331200 Steel Product Mfg From
Purchased Steel
331310 Alumina & Aluminum
Production & Processing
331400 Nonferrous Metal (except
Aluminum) Production &
Processing
331500 Foundries
Fabricated Metal Product
Manufacturing
332110 Forging & Stamping
332210 Cutlery & Handtool Mfg
332300 Architectural & Structural
Metals Mfg
332400 Boiler, Tank, & Shipping
Container Mfg
332510 Hardware Mfg
332610 Spring & Wire Product Mfg
332700 Machine Shops; Turned
Product; & Screw, Nut, & Bolt
Mfg
332810 Coating, Engraving, Heat
Treating, & Allied Activities
332900 Other Fabricated Metal
Product Mfg
Machinery Manufacturing
333100 Agriculture, Construction, &
Mining Machinery Mfg

-27-

333200 Industrial Machinery Mfg
333310 Commercial & Service
Industry Machinery Mfg
333410 Ventilation, Heating,
Air-Conditioning, &
Commercial Refrigeration
Equipment Mfg
333510 Metalworking Machinery Mfg
333610 Engine, Turbine & Power
Transmission Equipment Mfg
333900 Other General Purpose
Machinery Mfg
Computer and Electronic Product
Manufacturing
334110 Computer & Peripheral
Equipment Mfg
334200 Communications Equipment
Mfg
334310 Audio & Video Equipment
Mfg
334410 Semiconductor & Other
Electronic Component Mfg
334500 Navigational, Measuring,
Electromedical, & Control
Instruments Mfg
334610 Manufacturing &
Reproducing Magnetic &
Optical Media
Electrical Equipment, Appliance,
and Component Manufacturing
335100 Electric Lighting Equipment
Mfg
335200 Household Appliance Mfg
335310 Electrical Equipment Mfg
335900 Other Electrical Equipment &
Component Mfg
Transportation Equipment
Manufacturing
336100 Motor Vehicle Mfg
336210 Motor Vehicle Body & Trailer
Mfg
336300 Motor Vehicle Parts Mfg
336410 Aerospace Product & Parts
Mfg
336510 Railroad Rolling Stock Mfg
336610 Ship & Boat Building
336990 Other Transportation
Equipment Mfg
Furniture and Related Product
Manufacturing
337000 Furniture & Related Product
Manufacturing
Miscellaneous Manufacturing
339110 Medical Equipment &
Supplies Mfg
339900 Other Miscellaneous
Manufacturing

Wholesale Trade
Merchant Wholesalers, Durable
Goods
423100 Motor Vehicle & Motor
Vehicle Parts & Supplies
423200 Furniture & Home
Furnishings
423300 Lumber & Other Construction
Materials
423400 Professional & Commercial
Equipment & Supplies
423500 Metal & Mineral (except
Petroleum)
423600 Household Appliances &
Electrical & Electronic Goods
423700 Hardware, & Plumbing &
Heating Equipment &
Supplies
423800 Machinery, Equipment, &
Supplies

Codes for Principal Business Activity and Principal Product or Service (Continued)
423910 Sporting & Recreational
Goods & Supplies
423920 Toy & Hobby Goods &
Supplies
423930 Recyclable Materials
423940 Jewelry, Watch, Precious
Stone, & Precious Metals
423990 Other Miscellaneous Durable
Goods
Merchant Wholesalers, Nondurable
Goods
424100 Paper & Paper Products
424210 Drugs & Druggists' Sundries
424300 Apparel, Piece Goods, &
Notions
424400 Grocery & Related Products
424500 Farm Product Raw Materials
424600 Chemical & Allied Products
424700 Petroleum & Petroleum
Products
424800 Beer, Wine, & Distilled
Alcoholic Beverages
424910 Farm Supplies
424920 Book, Periodical, &
Newspapers
424930 Flower, Nursery Stock, &
Florists' Supplies
424940 Tobacco Products &
Electronic Cigarettes
424950 Paint, Varnish, & Supplies
424990 Other Miscellaneous
Nondurable Goods
Wholesale Trade Agents & Agents
and Brokers
425120 Wholesale Trade Agents &
Brokers

455210 Warehouse Clubs,
Supercenters, & Other Merch
Retailers
Health and Personal Care Retailers
456110 Pharmacies & Drug Retailers
456120 Cosmetics, Beauty Supplies,
& Perfume Retailers
456130 Optical Goods Retailers
446190 Other Health & Personal
Care Retailers
Gasoline Stations & Fuel Dealers
457100 Gasoline Stations (including
convenience stores with gas)
457210 Fuel Dealers (including
Heating Oil & Liquefied
Petroleum)
Clothing & Accessories Retailers
458110 Clothing & Clothing
Accessories Retailers
458210 Shoe Retailers
458310 Jewelry Retailers
458320 Luggage & Leather Goods
Retailers
Sporting, Hobby, Book, Musical
Instrument, & Miscellaneous
Retailers
459110 Sporting Goods Retailers
459120 Hobby, Toy, & Game
Retailers
459130 Sewing, Needlework, & Piece
Goods Retailers
459140 Musical Instrument &
Supplies Retailers
459210 Book Retailers & News
Dealers (including
newsstands)
459310 Florists
459410 Office Supplies & Stationery
Retailers
459420 Gift, Novelty, & Souvenir
Retailers
459510 Used Merchandise Retailers
459910 Pet & Pet Supplies Retailers
459920 Art Dealers
459930 Manufactured (Mobile) Home
Dealers
459990 All Other Miscellaneous
Retailers (including tobacco,
candle, & trophy retailers)
Nonstore Retailers
Nonstore retailers sell all
types of merchandise using
such methods as Internet,
mail-order catalogs,
interactive television, or direct
sales. These types of
Retailers should select the
PBA associated with their
primary line of products sold.
For example, establishments
primarily selling prescription
and non-prescription drugs,
select PBA code 456110
Pharmacies & Drug
Retailers.

485990 Other Transit & Ground
Passenger Transportation
Pipeline Transportation
486000 Pipeline Transportation
Scenic & Sightseeing
Transportation
487000 Scenic & Sightseeing
Transportation
Support Activities for
Transportation
488100 Support Activities for Air
Transportation
488210 Support Activities for Rail
Transportation
488300 Support Activities for Water
Transportation
488410 Motor Vehicle Towing
488490 Other Support Activities for
Road Transportation
488510 Freight Transportation
Arrangement
488990 Other Support Activities for
Transportation
Couriers and Messengers
492110 Couriers & Express Delivery
Services
492210 Local Messengers & Local
Delivery
Warehousing and Storage
493100 Warehousing & Storage
(except lessors of
mini-warehouses &
self-storage units)

522299 Intl, Secondary Market, &
Other Nondepo. Credit
Intermediation
Activities Related to Credit
Intermediation
522300 Activities Related to Credit
Intermediation (including loan
brokers, check clearing, &
money transmitting)
Securities, Commodity Contracts,
and Other Financial Investments
and Related Activities
523150 Investment Banking &
Securities Intermediation
523160 Commodity Contracts
Intermediation
523210 Securities & Commodity
Exchanges
523900 Other Financial Investment
Activities (including portfolio
management & investment
advice)
Insurance Carriers and Related
Activities
524110 Direct Life, Health, & Medical
Insurance Carriers
524120 Direct Insurance (except Life,
Health, & Medical) Carriers
524210 Insurance Agencies &
Brokerages
524290 Other Insurance Related
Activities (including
third-party administration of
insurance and pension funds)
Funds, Trusts, and Other Financial
Vehicles
525100 Insurance & Employee
Benefit Funds
525910 Open-End Investment Funds
(Form 1120-RIC,)
525920 Trusts, Estates, & Agency
Accounts
525990 Other Financial Vehicles
(including mortgage REITs
and closed-end investment
funds)
“Offices of Bank Holding Companies”
and “Offices of Other Holding
Companies” are located under
Management of Companies
(Holding Companies) below.

TREASURY/IRS
AND OMB USE
ONLY DRAFT
December 6, 2023

Retail Trade

Motor Vehicle and Parts Dealers
441110 New Car Dealers
441120 Used Car Dealers
441210 Recreational Vehicle Dealers
441222 Boat Dealers
441227 Motorcycle, ATV, & All Other
Motor Vehicle Dealers
441300 Automotive Parts,
Accessories, & Tire Retailers
Building Material and Garden
Equipment and Supplies Dealers
444110 Home Centers
444120 Paint & Wallpaper Stores
444140 Hardware Retailers
444180 Other Building Material
Dealers
444200 Lawn & Garden Equipment &
Supplies Retailers
Food and Beverage Retailers
445110 Supermarkets and Other
Grocery (except
Convenience) Retailers
445131 Convenience Retailers
445132 Vending Machine Operators
445230 Fruit & Vegetable Retailers
445240 Meat Retailers
445250 Fish & Seafood Retailers
445291 Baked Goods Retailers
445292 Confectionery & Nut
Retailers
445298 All Other Specialty Food
Retailers
445320 Beer, Wine, & Liquor
Retailers
Furniture and Home Furnishings
Retailers
449110 Furniture Retailers
449121 Floor Covering Retailers
449122 Window Treatment Retailers
449129 All Other Home Furnishings
Retailers
Electronics and Appliance Retailers
449210 Electronics & Appliance
Retailers (including
computers)
General Merchandise Retailers
455110 Department Stores

Transportation and
Warehousing
Air, Rail, and Water Transportation
481000 Air Transportation
482110 Rail Transportation
483000 Water Transportation
Truck Transportation
484110 General Freight Trucking,
Local
484120 General Freight Trucking,
Long-Distance
484200 Specialized Freight Trucking
Transit and Ground Passenger
Transportation
485110 Urban Transit Systems
485210 Interurban & Rural Bus
Transportation
485310 Taxi Service
485320 Limousine Service
485410 School & Employee Bus
Transportation
485510 Charter Bus Industry

Information

Motion Picture and Sound
Recording Industries
512100 Motion Picture & Video
Industries (except video
rental)
512200 Sound Recording Industries
Publishing Industries
513110 Newspaper Publishers
513120 Periodical Publishers
513130 Book Publishers
513140 Directory & Mailing List
Publishers
513190 Other Publishers
513210 Software Publishers
Broadcasting & Content Providers
& Telecommunications
516100 Radio & Television
Broadcasting Stations
516210 Media Streaming, Social
Networks, & Other Content
Providers
517000 Telecommunications
(including Wired, Wireless,
Satellite, Cable & Other
Program Distribution,
Resellers, Agents, Other
Telecommunications, &
Internet Service Providers)
Data Processing, Web Search
Portals, & Other Information
Services
518210 Computing Infrastructure
Providers, Data Processing,
Web Hosting, & Related
Services
519200 Web Search Portals,
Libraries, Archives, & Other
Info. Services

Finance and Insurance
Depository Credit Intermediation
522110 Commercial Banking
522130 Credit Unions
522180 Savings Institutions & Other
Depository Credit
Intermediation
Nondepository Credit
Intermediation
522210 Credit Card Issuing
522220 Sales Financing
522291 Consumer Lending
522292 Real Estate Credit (including
mortgage bankers &
originators)

-28-

Real Estate and Rental and
Leasing
Real Estate
531110 Lessors of Residential
Buildings & Dwellings
(including equity REITs)
531120 Lessors of Nonresidential
Buildings (except
Mini-Warehouses) (including
equity REITs)
531130 Lessors of Mini-Warehouses
& Self-Storage Units
(including equity REITs)
531190 Lessors of Other Real Estate
Property (including equity
REITs)
531210 Offices of Real Estate Agents
& Brokers
531310 Real Estate Property
Managers
531320 Offices of Real Estate
Appraisers
531390 Other Activities Related to
Real Estate
Rental and Leasing Services
532100 Automotive Equipment
Rental & Leasing
532210 Consumer Electronics &
Appliances Rental
532281 Formal Wear & Costume
Rental
532282 Video Tape & Disc Rental
532283 Home Health Equipment
Rental
532284 Recreational Goods Rental
532289 All Other Consumer Goods
Rental
532310 General Rental Centers

Codes for Principal Business Activity and Principal Product or Service (Continued)
532400 Commercial & Industrial
Machinery & Equipment
Rental & Leasing
Lessors of Nonfinancial Intangible
Assets (except copyrighted works)
533110 Lessors of Nonfinancial
Intangible Assets (except
copyrighted works)

Professional, Scientific, and
Technical Services

Administrative and Support and
Waste Management and
Remediation Services
Administrative and Support
Services
561110 Office Administrative
Services
561210 Facilities Support Services
561300 Employment Services
561410 Document Preparation
Services
561420 Telephone Call Centers
561430 Business Service Centers
(including private mail
centers & copy shops)
561440 Collection Agencies
561450 Credit Bureaus
561490 Other Business Support
Services (including
repossession services, court
reporting, & stenotype
services)
561500 Travel Arrangement &
Reservation Services
561600 Investigation & Security
Services
561710 Exterminating & Pest Control
Services
561720 Janitorial Services
561730 Landscaping Services
561740 Carpet & Upholstery
Cleaning Services
561790 Other Services to Buildings &
Dwellings
561900 Other Support Services
(including packaging &
labeling services, &
convention & trade show
organizers)
Waste Management and
Remediation Services
562000 Waste Management &
Remediation Services

621420 Outpatient Mental Health &
Substance Abuse Centers
621491 HMO Medical Centers
621492 Kidney Dialysis Centers
621493 Freestanding Ambulatory
Surgical & Emergency
Centers
621498 All Other Outpatient Care
Centers
Medical and Diagnostic
Laboratories
621510 Medical & Diagnostic
Laboratories
Home Health Care Services
621610 Home Health Care Services
Other Ambulatory Health Care
Services
621900 Other Ambulatory Health
Care Services (including
ambulance services & blood
& organ banks)
Hospitals
622000 Hospitals
Nursing and Residential Care
Facilities
623000 Nursing & Residential Care
Facilities
Social Assistance
624100 Individual & Family Services
624200 Community Food & Housing,
& Emergency & Other Relief
Services
624310 Vocational Rehabilitation
Services
624410 Childcare Services

721310 Rooming & Boarding
Houses, Dormitories, &
Workers’ Camps
Food Services and Drinking Places
722300 Special Food Services
(including food service
contractors & caterers)
722410 Drinking Places (Alcoholic
Beverages)
722511 Full Service Restaurants
722513 Limited Service Restaurants
722514 Cafeterias, Grill Buffets,
Buffets
722515 Snack & Nonalcoholic
Beverage Bars

TREASURY/IRS
AND OMB USE
ONLY DRAFT
December 6, 2023

Legal Services
541110 Offices of Lawyers
541190 Other Legal Services
Accounting, Tax Preparation,
Bookkeeping, and Payroll Services
541211 Offices of Certified Public
Accountants
541213 Tax Preparation Services
541214 Payroll Services
541219 Other Accounting Services
Architectural, Engineering, and
Related Services
541310 Architectural Services
541320 Landscape Architecture
Services
541330 Engineering Services
541340 Drafting Services
541350 Building Inspection Services
541360 Geophysical Surveying &
Mapping Services
541370 Surveying & Mapping (except
Geophysical) Services
541380 Testing Laboratories &
Services
Specialized Design Services
541400 Specialized Design Services
(including interior, industrial,
graphic, & fashion design)
Computer Systems Design and
Related Services
541511 Custom Computer
Programming Services
541512 Computer Systems Design
Services
541513 Computer Facilities
Management Services
541519 Other Computer Related
Services
Other Professional, Scientific, and
Technical Services
541600 Management, Scientific, &
Technical Consulting
Services
541700 Scientific Research &
Development Services
541800 Advertising & Public
Relations, & Related
Services
541910 Marketing Research & Public
Opinion Polling
541920 Photographic Services
541930 Translation & Interpretation
Services
541940 Veterinary Services
541990 All Other Professional,
Scientific, & Technical
Services

Management of Companies
(Holding Companies)
551111 Offices of Bank Holding
Companies
551112 Offices of Other Holding
Companies

Educational Services
611000 Educational Services
(including schools, colleges,
& universities)

Health Care and Social
Assistance
Offices of Physicians and Dentists
621111 Offices of Physicians (except
mental health specialists)
621112 Offices of Physicians, Mental
Health Specialists
621210 Offices of Dentists
Offices of Other Health
Practitioners
621310 Offices of Chiropractors
621320 Offices of Optometrists
621330 Offices of Mental Health
Practitioners (except
Physicians)
621340 Offices of Physical,
Occupational & Speech
Therapists, & Audiologists
621391 Offices of Podiatrists
621399 Offices of All Other
Miscellaneous Health
Practitioners
Outpatient Care Centers
621410 Family Planning Centers

Arts, Entertainment, and
Recreation

Performing Arts, Spectator Sports,
and Related Industries
711100 Performing Arts Companies
711210 Spectator Sports (including
sports clubs & racetracks)
711300 Promoters of Performing
Arts, Sports, & Similar Events
711410 Agents & Managers for
Artists, Athletes,
Entertainers, & Other Public
Figures
711510 Independent Artists, Writers,
& Performers
Museums, Historical Sites, and
Similar Institutions
712100 Museums, Historical Sites, &
Similar Institutions
Amusement, Gambling, and
Recreation Industries
713100 Amusement Parks & Arcades
713200 Gambling Industries
713900 Other Amusement &
Recreation Industries
(including golf courses, skiing
facilities, marinas, fitness
centers, & bowling centers)

Accommodation and Food
Services
Accommodation
721110 Hotels (except Casino
Hotels) & Motels
721120 Casino Hotels
721191 Bed & Breakfast Inns
721199 All Other Traveler
Accommodation
721210 RV (Recreational Vehicle)
Parks & Recreational Camps

-29-

Other Services

Repair and Maintenance
811110 Automotive Mechanical &
Electrical Repair &
Maintenance
811120 Automotive Body, Paint,
Interior, & Glass Repair
811190 Other Automotive Repair &
Maintenance (including oil
change & lubrication shops &
car washes)
811210 Electronic & Precision
Equipment Repair &
Maintenance
811310 Commercial & Industrial
Machinery & Equipment
(except Automotive &
Electronic) Repair &
Maintenance
811410 Home & Garden Equipment
& Appliance Repair &
Maintenance
811420 Reupholstery & Furniture
Repair
811430 Footwear & Leather Goods
Repair
811490 Other Personal & Household
Goods Repair & Maintenance
Personal and Laundry Services
812111 Barber Shops
812112 Beauty Salons
812113 Nail Salons
812190 Other Personal Care
Services (including diet &
weight reducing centers)
812210 Funeral Homes & Funeral
Services
812220 Cemeteries & Crematories
812310 Coin-Operated Laundries &
Drycleaners
812320 Drycleaning & Laundry
Services (except
Coin-Operated)
812330 Linen & Uniform Supply
812910 Pet Care (except Veterinary)
Services
812920 Photofinishing
812930 Parking Lots & Garages
812990 All Other Personal Services
Religious, Grantmaking, Civic,
Professional, and Similar
Organizations
813000 Religious, Grantmaking,
Civic, Professional, & Similar
Organizations (including
condominium and
homeowners associations)

Other
999999 Unclassified Establishments
(unable to classify)

Index
10% interest 6
50% interest 6

A

Foreign Partnership 5
Future Developments 1

G

TREASURY/IRS
AND OMB USE
ONLY DRAFT
December 6, 2023

Acquisitions 3
Analysis of partners' capital accounts 18
Attached statements 17

General Instructions 1
General Reporting Instructions for
Schedule K-1 16

H

B

Hyperinflationary Exception 9

Balance sheets per books 17

I

C

Categories of Filers 3
Category 1 filer 3, 8, 11
Category 2 filer 3, 8
Category 3 filer 3, 8, 11
Category 4 filer 3, 8
Change in a Proportional Interest 6
Changes in Proportional Interests 3
Consolidated Return 8
Constructive Ownership 6
Control of a Corporation 6
Corrections to Form 8865 7

Identifying Numbers and Addresses 7

L

List of Codes Used in Schedule K-1 (Form
8865) 22

P

Partnership 5
Penalties 6
Purpose of Form 2

R

D

Definitions 5
Dispositions 3

E

Schedule G (Form 8865). Statement of
Application of the Gain Deferral Method
Under Section 721(c) 12
Schedule H (Form 8865). Acceleration
Events and Exceptions Reporting
Relating to Gain Deferral Method Under
Section 721(c) 14
Schedule N. Transactions Between
Controlled Foreign Partnership and
Partners or Other Related Entities 18
Schedule O (Form 8865). Transfer of
Property to a Foreign Partnership 18
Schedule P (Form 8865). Acquisitions,
Dispositions, and Changes of Interests
in a Foreign Partnership 20
Schedules K-2 (Form 8865), Partners’
Distributive Share Items—International,
and K-3 (Form 8865), Partner’s Share of
Income, Deductions, Credits,
etc.—International 17
Schedules K, Partners' Distributive Share
Items and K-1 (Form 8865), Partner’s
Share of Income, Deductions, Credits,
Etc. 16
Specific Instructions 7

Exceptions for Filing:
Category 4 filers 4
Exceptions to Filing 4
Constructive owners 4
Multiple Category 1 filers 4

F

Relief for Category 1 and 2 filers 5

T

Tax Year 7
Treaty-based Return Positions 6

U

S

Schedule A-1. Certain partners of Foreign
Partnership 11
Schedule A-2. Foreign Partners of Section
721(c) Partnership 11
Schedule A-3. Affiliation Schedule 11
Schedule A. Constructive Ownership of
Partnership Interest 10
Schedule B. Income Statement–Trade or
Business Income 11
Schedule D. Capital Gains and Losses 11

Foreign Address 7

-30-

U.S. Person 6

W

What’s New 1
When To File 5
Who Must File 2