HomeK-2 & K-3 SCorps

Is there anything else we need to know?

At the time of this blog post, the IRS was still making changes to its approach to Schedules K-2 and K-3 in response to push-back from tax professionals and other parties. In particular, the American Institute of Certified Public Accountants (AICPA) and other organizations [...]

By |2022-03-04T12:35:43-05:00March 3rd, 2022|

What should we do if we don’t receive a Schedule K-3?

If you typically receive Schedules K-1 from partnerships and you are expecting Schedules K-3 this year, then you will generally need to wait for them before you can file your S corporation return. If you are expecting a 2021 Schedule K-3 but do not [...]

By |2022-03-04T12:36:53-05:00March 3rd, 2022|

Will we be able to e-file this year?

Yes. The IRS has released a timeline for accepting e-filed returns with the new Schedules K-2 and K-3. S corporation returns are slated for the middle of the year: Form Number                            [...]

By |2022-03-04T15:28:26-05:00March 3rd, 2022|

What happens if we don’t file the Schedules K-2 and K-3?

The penalty for failing to file or filing an incomplete Schedule K-2 or K-3 is $10,000. This penalty can be applied at both the entity level and the individual shareholder level. The IRS has provided temporary relief for this penalty for 2021 under Notice [...]

By |2022-03-04T14:50:07-05:00March 3rd, 2022|

Can the shareholders just decide not to claim foreign tax credits on their individual returns so that we don’t have to prepare Schedules K-2 and K-3 at the S corporation level?

Possibly. If the S corporation has no foreign income, assets, or other international items to report AND all shareholders forego (completely) the claiming of foreign tax credits on their individual returns, then the S corporation could potentially skip the filing of Schedules K-2 and [...]

By |2022-03-04T10:23:40-05:00March 3rd, 2022|

Will my S corporation need to file Schedules K-2 and K-3?

Most likely. The IRS’s FAQs on Schedules K-2 and K-3, released in mid-February 2022, clarified that many partnerships and S corporations, including those that do not have foreign assets or operations, may need to file the new forms: “In many instances, a partnership or [...]

By |2022-03-04T12:49:48-05:00March 3rd, 2022|
Go to Top