Instructions for IRS Form 1065 Schedule B-2 - Election out of the Centralized Partnership Audit Regime 2018

December 18, 2018 "Instructions For Irs Form 1065 Schedule B-2 - Election Out Of The Centralized Partnership Audit Regime" contain the latest filing requirements for the IRS-issued Form 1065. Download your copy of the instructions by clicking the link below.

IRS Form 1065 is tax form released and collected by the Internal Revenue Service of the United States.

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Instructions for Schedule B-2
Department of the Treasury
Internal Revenue Service
(Form 1065)
(December 2018)
Election Out of the Centralized Partnership Audit Regime
it is required to issue a Schedule K-1 to
If the partnership has more than 15
Section references are to the Internal Revenue
Code unless otherwise noted.
any of the following partners.
partners, use Part IV to continue the list of
A partnership.
partners.
Future Developments
A trust.
Ineligible partner types. Types of
A foreign entity that would not be
For the latest information about
partners that will invalidate your election
treated as a C corporation were it a
developments related to Schedule B-2
are the following.
domestic entity.
(Form 1065) and its instructions, such as
Partnerships,
A disregarded entity described in
legislation enacted after they were
Trusts,
Regulations 301.7701-2(c)(2)(i).
published, go to IRS.gov/Form1065.
Foreign entities not treated as C
An estate of an individual other than a
corporations if they were domestic
What’s New
deceased partner.
entities,
Any person that holds an interest in the
Disregarded entities described in
Bipartisan Budget Act. The Bipartisan
partnership on behalf of another person.
Regulations 301.7701-2(c)(2)(i),
Budget Act of 2015 (BBA) created a new
Estates of individuals other than those
Who Must File
centralized partnership audit regime
of deceased partners, and
effective for partnership tax years
Partnerships, including Real Estate
Persons that hold an interest in the
beginning after 2017. Section 6221(b) (as
Mortgage Investment Conduits (REMIC),
partnership on behalf of another person.
amended by BBA) provides that certain
that elect out of the centralized partnership
By completing Part I, you are making an
partnerships with 100 or fewer partners
audit regime must complete this form for
affirmative statement that all of the
may elect out of the centralized
every tax year that the election is to be
partners in the partnership meet eligibility
partnership audit regime. This schedule
effective. If the form is not completed
requirements under section 6221(b)(1)(C),
was created to allow partnerships to elect
correctly, the IRS may determine that the
as amended by BBA, and you have
out of the centralized partnership audit
election is not valid.
provided all of the information required on
regime.
this schedule.
How To File
Purpose of Form
Part II—List of S Corporation Share-
This form must be attached to a timely
holders. For each S corporation that is a
Partnerships with 100 or fewer partners
filed (including extensions) Form 1065 (or
partner in the partnership, provide the
can annually elect out of the centralized
Form 1066 in the case of a REMIC) for
name of the S corporation and the U.S.
partnership audit regime if each partner for
every tax year the partnership is electing
TIN of the S corporation. If there is more
the tax year is an individual, a C
out of the centralized partnership audit
than one S corporation that is a partner in
corporation, a foreign entity that would be
regime.
the partnership during the tax year,
treated as a C corporation were it
complete a separate Part II (and Part V, if
domestic, an S corporation, or an estate of
Specific Instructions
applicable) of this Schedule B-2 for each
a deceased partner. For purposes of
additional S corporation partner. For each
determining whether the partnership has
Part I—List of Eligible Partners. In
S corporation provide the correct name of
100 or fewer partners, the partnership
column 1 provide the name of the partner
each shareholder for the tax year of the S
must include, in the count of partners, all
required to be furnished a Schedule K-1
corporation ending with or within the
shareholders of each S corporation that is
from the partnership for the tax year. In
partnership tax year, the correct U.S. TIN
a partner. If a partnership makes an
column 2 provide the correct U.S. Tax
for each shareholder, and the type of
election out of the centralized partnership
Identification Number (TIN) of the partner.
person code. The following are codes
audit regime, the partnership must
Inaccurate TINs will result in validation
available for S corporation shareholders.
complete and attach this form to the
errors, and the IRS may determine that the
I— Individual
partnership return for the tax year the
election is not valid. In column 3 provide
T—Trust
election is being made.
the code for the type of eligible partner. If
E— Estate of deceased shareholder
the code is not one of the following, you
Eligible partnership. A partnership is an
O—Other
may not elect out of the centralized
eligible partnership if it has 100 or fewer
The “Other” code includes pension plans
partnership audit regime. The following
eligible partners for the tax year. Whether
under section 401(a), including Employee
are the codes to be used in column 3 for
the partnership has 100 or fewer partners
Stock Ownership Plans (ESOPs); section
eligible partners.
is determined by adding the number of
501(c)(3) charitable organizations; or
I— Individual
Schedules K-1 required to be issued by
eligible disregarded entities.
C—Corporation
the partnership for the tax year plus the
If there are more than 12 shareholders
S—S corporation
number of Schedules K-1 required to be
for Part II, use Part V to continue the list of
E— Estate of deceased partner
issued by each partner that is an S
shareholders for that S corporation
F— Foreign partner that would be
corporation to its shareholders for the tax
partner.
treated as a C corporation if it were a
year of the S corporation ending with or
domestic entity
within the partnership tax year. A
Part III—Total Number of Schedules
partnership is not an eligible partnership if
K-1 Required To Be Issued. The
Dec 18, 2018
Cat. No. 69661H
Instructions for Schedule B-2
Department of the Treasury
Internal Revenue Service
(Form 1065)
(December 2018)
Election Out of the Centralized Partnership Audit Regime
it is required to issue a Schedule K-1 to
If the partnership has more than 15
Section references are to the Internal Revenue
Code unless otherwise noted.
any of the following partners.
partners, use Part IV to continue the list of
A partnership.
partners.
Future Developments
A trust.
Ineligible partner types. Types of
A foreign entity that would not be
For the latest information about
partners that will invalidate your election
treated as a C corporation were it a
developments related to Schedule B-2
are the following.
domestic entity.
(Form 1065) and its instructions, such as
Partnerships,
A disregarded entity described in
legislation enacted after they were
Trusts,
Regulations 301.7701-2(c)(2)(i).
published, go to IRS.gov/Form1065.
Foreign entities not treated as C
An estate of an individual other than a
corporations if they were domestic
What’s New
deceased partner.
entities,
Any person that holds an interest in the
Disregarded entities described in
Bipartisan Budget Act. The Bipartisan
partnership on behalf of another person.
Regulations 301.7701-2(c)(2)(i),
Budget Act of 2015 (BBA) created a new
Estates of individuals other than those
Who Must File
centralized partnership audit regime
of deceased partners, and
effective for partnership tax years
Partnerships, including Real Estate
Persons that hold an interest in the
beginning after 2017. Section 6221(b) (as
Mortgage Investment Conduits (REMIC),
partnership on behalf of another person.
amended by BBA) provides that certain
that elect out of the centralized partnership
By completing Part I, you are making an
partnerships with 100 or fewer partners
audit regime must complete this form for
affirmative statement that all of the
may elect out of the centralized
every tax year that the election is to be
partners in the partnership meet eligibility
partnership audit regime. This schedule
effective. If the form is not completed
requirements under section 6221(b)(1)(C),
was created to allow partnerships to elect
correctly, the IRS may determine that the
as amended by BBA, and you have
out of the centralized partnership audit
election is not valid.
provided all of the information required on
regime.
this schedule.
How To File
Purpose of Form
Part II—List of S Corporation Share-
This form must be attached to a timely
holders. For each S corporation that is a
Partnerships with 100 or fewer partners
filed (including extensions) Form 1065 (or
partner in the partnership, provide the
can annually elect out of the centralized
Form 1066 in the case of a REMIC) for
name of the S corporation and the U.S.
partnership audit regime if each partner for
every tax year the partnership is electing
TIN of the S corporation. If there is more
the tax year is an individual, a C
out of the centralized partnership audit
than one S corporation that is a partner in
corporation, a foreign entity that would be
regime.
the partnership during the tax year,
treated as a C corporation were it
complete a separate Part II (and Part V, if
domestic, an S corporation, or an estate of
Specific Instructions
applicable) of this Schedule B-2 for each
a deceased partner. For purposes of
additional S corporation partner. For each
determining whether the partnership has
Part I—List of Eligible Partners. In
S corporation provide the correct name of
100 or fewer partners, the partnership
column 1 provide the name of the partner
each shareholder for the tax year of the S
must include, in the count of partners, all
required to be furnished a Schedule K-1
corporation ending with or within the
shareholders of each S corporation that is
from the partnership for the tax year. In
partnership tax year, the correct U.S. TIN
a partner. If a partnership makes an
column 2 provide the correct U.S. Tax
for each shareholder, and the type of
election out of the centralized partnership
Identification Number (TIN) of the partner.
person code. The following are codes
audit regime, the partnership must
Inaccurate TINs will result in validation
available for S corporation shareholders.
complete and attach this form to the
errors, and the IRS may determine that the
I— Individual
partnership return for the tax year the
election is not valid. In column 3 provide
T—Trust
election is being made.
the code for the type of eligible partner. If
E— Estate of deceased shareholder
the code is not one of the following, you
Eligible partnership. A partnership is an
O—Other
may not elect out of the centralized
eligible partnership if it has 100 or fewer
The “Other” code includes pension plans
partnership audit regime. The following
eligible partners for the tax year. Whether
under section 401(a), including Employee
are the codes to be used in column 3 for
the partnership has 100 or fewer partners
Stock Ownership Plans (ESOPs); section
eligible partners.
is determined by adding the number of
501(c)(3) charitable organizations; or
I— Individual
Schedules K-1 required to be issued by
eligible disregarded entities.
C—Corporation
the partnership for the tax year plus the
If there are more than 12 shareholders
S—S corporation
number of Schedules K-1 required to be
for Part II, use Part V to continue the list of
E— Estate of deceased partner
issued by each partner that is an S
shareholders for that S corporation
F— Foreign partner that would be
corporation to its shareholders for the tax
partner.
treated as a C corporation if it were a
year of the S corporation ending with or
domestic entity
within the partnership tax year. A
Part III—Total Number of Schedules
partnership is not an eligible partnership if
K-1 Required To Be Issued. The
Dec 18, 2018
Cat. No. 69661H
number of Schedules K-1 are determined
Line 1. Enter the total number of
partners, complete Part IV—Continuation
by adding the number of Schedules K-1
partners reported on Part I and Part IV.
List of Eligible Partners.
required to be issued by the partnership
Part V. Complete Part V if the Part II S
Line 2. Enter the total number of
for the tax year plus the number of
corporation partner is required to issue
shareholders reported on Part II and Part
Schedules K-1 required to be issued by
Schedules K-1 to more than 12
V. Do not include the S corporation
each partner that is an S corporation to its
shareholders. Always include the name of
partner(s) in this count since those
shareholders for the tax year of the S
the S corporation partner and U.S. TIN for
partners should be included on Line 1.
corporation ending with or within the
the partner at the top of the page for the
partnership tax year. Part III adds the total
Line 3. Add Line 1 and Line 2 and
grouping of shareholders that are listed.
number of Schedules K-1 required to be
report the sum on Line 3. This number
Use the same instructions provided under
issued by the partnership (as listed in Part
should not exceed 100. If it does, this
Part II.
I and Part IV) and the number of
partnership is not eligible to elect out.
Schedules K-1 required to be issued by
Include this total on Form 1065,
each S corporation partner (as listed in
Schedule B, Question 25.
Part II and Part V) to determine the total
Part IV. If the partnership is required to
number of partners in the partnership for
issue Schedules K-1 to more than 15
the tax year.
Instructions for Schedule B-2 (Form 1065) (Dec. 2018)
-2-

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