Summary of Changes to Instructions

2009 Instructions for Schedule K-1 (F 1065)

Purpose: This is the first circulated draft of the 2009 Instructions for Schedule K-1 (Form 1065)
for your review and comments. See the next page for a discussion of the major changes.
TPCC Meeting: None, but one may be arranged if requested.
Prior Version: The 2008 Instructions for Schedule K-1 (Form 1065) are available at:
http://www.irs.gov/pub/irs-pdf/i1065sk1.pdf
Form: The 2009 Schedule K-1 (Form 1065) was circulated earlier and is attached at the end
of this circulation.
Other Products: Circulations of draft tax forms, instructions, notices, and publications are
posted at http://taxforms.web.irs.gov/Circulations/index.htm
Comments: Please email, fax, call, or mail any comments to me by October 23, 2009. Comments
submitted by telephone must be followed up in writing to be considered. Send a copy of any
email comments to the instruction’s reviewer, Sharon Dewsbury, at [email protected]
David Jeffrey Buchanan
Tax Forms and Publications
SE:W:CAR:MP:T:B:B
Email: [email protected]
Phone: 202-622-3085
Fax: 202-622-3262

Memo of Major Changes for 2009 Instructions for Sch K-1 (F 1065)

Throughout the document, we have updated all year references as necessary. Also, we
have updated line references on forms in accordance with the information available at the
time of circulation.
Page 2
In an email from Bob Erickson dated 07/30/09, he passed along a recommendation made
by counsel to add a line to the worksheet on page 2. The line added is line 8, all
subsequent lines were renumbered accordingly. Line 8 is a decrease that parallels the
increase on line 3. The text of the line comes from Bob’s email.
Page 5
In conjunction with the addition of Item M on Sch K-1, we have added instructions for
Item M on page 5. The instructions tell the partner that the partnership will check the
“Yes” box if the partner contributed property with a built-in gain or loss. If the “Yes” box
is checked, the partnership will attach a statement containing certain information about
the property.
Page 8
In the first column on page 8, we added a bulleted item for the reporting of current year
section 108(i) COD income. (PL 111-5, Sec. 1231)
Page 9
Under “Code C”, we deleted the paragraph pertaining to food inventory contributions by
a qualified farmer or rancher. This expired after December 31, 2008. (IRC 170(b)(3))
Under “Code G”, we deleted the paragraph regarding cash contributions for relief efforts
in Midwestern disaster areas. It is not applicable for contributions made after December
31, 2008. (PL 110-343, Sec 702(d)(12)) We edited the introductory paragraph and the
paragraph on qualified conservation contributions of property used in agriculture or
livestock production into one paragraph. Since only one item is being reported using this
code, we removed the text stating the reporting had to be made on an attached statement.
Page 10
In the middle column, in the next to last bullet point, we added “for productions
beginning before January 1, 2010” at the end of the first sentence. This was done to
conform to IRC 181(f).

In the middle column, we added the last bullet point for the reporting of the current year
section 108(i) OID deduction. (PL 111-5, Sec. 1231)
Page 11
Under Code P, we deleted the following credits, as they have expired.
•
•
•

Welfare-to-work credit (Form 8861).
Credit for contributions to selected community development corporations (Form
8847).
Employee retention credit for affected Midwestern disaster area employers
(Section A of Form 5884-A).

Also, we have added credits enacted in 2009.
•
•

Qualified plug-in electric drive motor vehicle credit (Form 8936).
Qualified plug-in electric vehicle credit (Part I of Form 8834).

In regard to a comment we received last year after the 1065 Instructions went to print, we
added a separate bullet point for each bond credit that is reported on Form 8912, Credit to
Holders of Tax Credit Bonds.
Page 12
On Sch K-1 (F 1065), we switched the items being reported with codes B and C.
Accordingly, we switched the instructions on page 12. The code B instructions now
pertain to distributions subject to section 737, and the code C instructions now pertain to
distributions of other property.
Page 13
Under Code E, we rewrote the text to say that the partnership will provide a statement
that will assist the partner in completing Form 3468, and cited the individual lines on the
form to which the information on the statement pertains.
Under Code I, Recapture of other credits, we modified the references to refer to credits
that were enacted in 2009. Specifically, we made reference to the new full title of Form
8834, Qualified Plug-in Electric and Electric Vehicle Credit, and added a reference to the
qualified plug-in electric drive motor vehicle credit (claimed on Form 8936).
Page 14
We added a section entitled “Section 108(i) information (code X)”. This was added to
take into account the changes made necessary by PL 111-5, Section 1231(a) and Rev
Proc 2009-37. Because of the code X change, code Y is now used to report “Other
Information”.

Under “Code Y. Other Information”, we added item 8, which pertains to qualifying
advanced energy project property. (PL 111-5, section 1302)
Under “Code Y. Other Information”, we added item 9, which pertains to certain
situations in which the partnership must attach to the partner’s Schedule K-1 a statement
containing the information the partner will need to complete Schedule P of Form 1120-F,
List of Foreign Partner Interests in Partnerships. We added this text based on a comment
received from International Counsel.
Under “Code Y. Other Information”, we modified item 11 to state that the corporate
partner must make the notification to the partnership in writing, and to refer to Rev. Proc.
2009-16, 2009-6 I.R.B. 449 and Rev. Proc. 2009-33, 2009-29 I.R.B. 150 for more
information on the written notification.