On December 2, 2022, the IRS released updated 2022 draft instructions for Schedules K-2 and K-3 that modified a new exception to filing and furnishing Schedules K-2 and K-3 to partners for tax year 2022.
As of this writing (January 3, 2023), these changes are still in draft form and are subject to change. This update provides a high-level overview of the December 2, 2022 updated draft of the 2022 K-2 / K-3 form instructions, particularly related to the domestic filing exception.
If partnerships meet the requirements listed below, they are not required to file Schedules K-2 and K-3 under the revised exception.
Filing exemption requirements:
Smith + Howard will carefully evaluate this exception for all applicable entities and will not file schedules K-2 or K-3 unless the flow-through entity is required to do so or receives a request from a partner. Please contact a member of our tax team if you have any new foreign activity in 2022 or any questions on the content above.
Smith + Howard’s tax team will continue to monitor this evolving matter and will provide updates as appropriate. If you have any questions on whether your partnership meets the requirements listed above, please contact a Smith + Howard advisor today.
If you have any questions and would like to connect with a team member please call 404-874-6244 or contact an advisor below.
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