Return of U.S. Persons With Respect to Certain Foreign Partnerships

2017

Instructions for Form 8865

Department of the Treasury
Internal Revenue Service

Return of U.S. Persons With Respect to Certain Foreign Partnerships
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. Affiliation
Schedule . . . . . . . . . . . . . .
Schedule B. Income
Statement—Trade or
Business Income . . . . . . . .
Schedule D. Capital Gains and
Losses . . . . . . . . . . . . . . .
Schedules K and K-1. Partners'
Distributive Share Items . . . .
Schedule L. Balance Sheets per
Books . . . . . . . . . . . . . . . .
Schedule M. Balance Sheets for
Interest Allocation . . . . . . . .
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. Transfer of Property
to a Foreign Partnership . . . .
Schedule P. Acquisitions,
Dispositions, and Changes of
Interests in a Foreign
Partnership . . . . . . . . . . . .
Index . . . . . . . . . . . . . . . . . . .

Page

... 1
... 6
... 9
... 9
... 9

... 9
. . 10
. . 10
. . 11
. . 11
. . 11
. . 11

See the following sections in these
instructions: Who Must File;
Categories of Filers; Definitions;
Penalties; Schedule A. Constructive
Ownership of Partnership Interest;
Schedule A-1. Certain Partners of
Foreign Partnership; Schedules K and
K-1. Partners' Distributive Share
Items; Schedule O. Transfer of
Property to a Foreign Partnership; and
Schedule P. Acquisitions,
Dispositions, and Changes of
Interests in a Foreign Partnership.
These regulations are available at
IRS.gov/IRB/2017-07_IRB/ar10.html.

Future Developments

. . 11
. . 12

. . 13
. . 19

What’s New
Temporary Regulations issued in
January 2017 under section 721(c)
address contributions of appreciated
property by U.S. persons to
partnerships with foreign partners
related to the contributing U.S.
person. These regulations:
Override the nonrecognition of gain
on a contribution of property under
section 721(a) unless the gain deferral
method is adopted (Temporary
Regulations section 1.721(c)-3T).
Provide new reporting requirements
for these contributions (Temporary
Regulations section 1.721(c)-6T).
Generally, these reporting
requirements apply to contributions
occurring on or after January 18,
Oct 06, 2017

2017. See Temporary Regulations
section 1.721(c)-6T(g) for special
rules related to effectively connected
income and transition rules. For
reporting requirements relating to
contributions occurring prior to
January 18, 2017, see Notice
2015-54, available at IRS.gov/irb/
2015-34_IRB/ar08.html.

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.

General Instructions

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, (or Form 1065-B, U.S. Return
of Income for Electing Large
Partnerships, if the foreign partnership
is an electing large partnership).

Cat. No. 26053N

If you are
completing Form
8865

Then use the
instructions for
Forms 1065/1065-B:

Schedule B

Form 1065, page 1
(income and
deductions); Form
1065-B, Parts I and II

Schedules K and K-1 Schedules K and K-1
Schedule L

Schedule L

Schedule M-1

Schedule M-1

Schedule M-2

Schedule M-2

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

Purpose of Form

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).

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.
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, Schedules A, A-2, N,
and K-1) plus any additional
schedules that Category 3 filers are
required to submit (Schedules A-1
and O).

Complete a separate Form 8865
and the applicable schedules for each
foreign partnership.
File the 2017 Form 8865 with your
income tax return for your tax year
beginning in 2017.
If a Form 8832, Entity Classification
Election, was filed for this entity for the
current tax year, see When 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.
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
with respect to that partnership. See
Temporary Regulations section
1.721(c)-6T(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 with respect to a
partnership under Temporary
Regulation sections 1.721(c)-6T(b)(2)
(iv) and 1.721(c)-6T(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
Temporary Regulation sections
1.721(c)-3T(d) and 1.721(c)-6T(c)(2).
See U.S. transferor, later.

Categories of Filers
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 with respect to a
section 721(c) partnership for the year
of contribution and subsequent years,
pursuant to Temporary Regulations
section 1.721(c)-6T. See Section
721(c) partnership and U.S.
transferor, later.
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

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-2—Affiliation Schedule
Schedule B—Income Statement—Trade or Business Income
Schedule K—Partners' Distributive Share Items
Schedule L—Balance Sheets per Books
Schedule M—Balance Sheets for Interest Allocation
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 K-1—Partner's Share of Income, Deductions, Credits, etc. (direct partners only)
Schedule O—Transfer of Property to a Foreign Partnership
Schedule P—Acquisitions, Dispositions, and Changes of Interests in a Foreign Partnership

-2-

Instructions for Form 8865 (2017)

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 with respect to
the contribution, its partners will not
be required to report the transfer.
A Category 3 filer includes a U.S.
transferor who (i) contributes section
721(c) property to a section 721(c)
partnership, and (ii) has reporting
requirements pursuant to Temporary
Regulations section 1.721(c)-6T(b)
(2). 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.
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 did not 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 Change in proportional interest,
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
Temporary Regulations section
1.721(c)-5T. In this case, the acquirer
may become a successor U.S.
transferor and may have a reporting
Instructions for Form 8865 (2017)

requirement under Temporary
Regulations section 1.721(c)-6T.
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 Temporary
Regulations section 1.721(c)-4T. For
acceleration events exceptions, see
Temporary Regulations section
1.721(c)-5T.
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.

Exceptions to Filing
Multiple Category 1 filers. If during
the tax year of the partnership more
than one U.S. person qualifies as a
-3-

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 is not
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
and K-1 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 “e-file” if the Form
8865 has been or will be filed
electronically).
A U.S. person who qualifies
for this exception to the
CAUTION Category 1 filing requirement
would still have 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 or 4 filer in addition to
the Controlled Foreign Partnership
Reporting statement.

!

Constructive owners. See
Constructive ownership, later. A
Category 1 or 2 filer that does not 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) is not 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
3. Form 8865 is filed for the
foreign partnership by another
Category 1 filer under the multiple
Category 1 filers exception.
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 is not 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 8a
and 8b on Form 8865. See Item H8.
Separate Units Note, later, for more
information.
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 are not
required to file Form 8865.
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 are not
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 are not 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.
Example. Partner A does not 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 did not
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 is not
required to report his acquisition of the
15% interest in FPS as a Category 4
filer.

Relief for Category 1 and 2
Filers When the Foreign
Partnership Files Form 1065 or
Form 1065-B

If a foreign partnership files Form
1065 or Form 1065-B for its tax year,
Category 1 and 2 filers may use a
copy of the completed Form 1065 or
1065-B schedules in place of the
equivalent schedules of Form 8865.
If you file Form 8865 with an
electronically filed income tax return,
see the electronic filing publications
-4-

identified in the instructions for your
income tax return for more
information.
See the first paragraph under
General Instructions, earlier, for the
Form 1065/1065-B 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 2017 tax year.
FPS completes and files a Form 1065
for its 2017 tax year. Instead of
completing Schedules B, K, L, M-1,
M-2, and K-1 of Form 8865, Partner A
may attach to its Form 8865 page 1 of
Form 1065 and Form 1065 Schedules
K, L, M-1, M-2, and K-1 (including the
Schedules K-1 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 page.
Schedule A.
Schedule A-1.
Schedule A-2.
Schedule M.
Schedule N.
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 2017 tax year,
Partner A may file with Form 8865 the
Schedule K-1 (Form 1065) that it
receives from the partnership instead
of Schedule K-1 (Form 8865). Partner
A must complete the following items
and schedules on Form 8865.
The first page.
Schedule A.
Schedule A-2.
Schedule N.

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 do
not 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 do not file Form 8865
on time.

Definitions
Partnership. A partnership is the
relationship between two or more
Instructions for Form 8865 (2017)

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 is not, within the meaning of the
regulations under section 7701, a
corporation, trust, estate, or sole
proprietorship.
A joint undertaking merely to share
expenses is not a partnership. Mere
co-ownership of property that is
maintained and leased or rented is not
a partnership. However, if the
co-owners provide services to the
tenants, a partnership exists.
Foreign partnership. A foreign
partnership is a partnership that is not
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 Temporary Regulations section
1.721(c)-6T(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 related
foreign person with respect to the U.S.
transferor is a direct or indirect partner
in the partnership and the U.S.
transferor and related persons own
80% or more of the interests in
partnership capital, profits,
deductions, or losses. See Temporary
Regulations section 1.721(c)- 1T(b)
(14).
U.S. transferor. A U.S. transferor is
a U.S. person other than a domestic
partnership. See Temporary
Regulations section 1.721(c)-1T(b)
(18).
Section 721(c) property. Section
721(c) property is property (other than
Instructions for Form 8865 (2017)

excluded property) with built-in gain
that is contributed to a partnership by
a U.S. transferor, including pursuant
to a contribution described in
Temporary Regulations section
1.721(c)-2T(d) (partnership
look-through rule). See Temporary
Regulations section 1.721(c)-1T(b)
(15).
Gain deferral method. The gain
deferral method is the method
described in Temporary Regulations
section 1.721(c)-3T(b) applied to
avoid the immediate recognition of
gain upon a contribution of section
721(c) property to a section 721(c)
partnership under Temporary
Regulations section 1.721(c)-2T(b).

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 is not 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).

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.

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).

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 his or her family.
The family of an individual includes
only that individual's spouse, brothers,
sisters, 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 timely submit all information required of Category 1 and
2 filers.
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 is not
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, 902, and 960. If the failure
continues 90 days or more after the
date the IRS mails notice of the

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.

-5-

Penalties

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 for
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 are not met. Any person
required to file Form 8865 who does
not file under the multiple Category 1
filers exception may be subject to the
above penalties if the other person
does not file a correctly completed
form and schedules. See Exceptions
to Filing, earlier.
Failure to file information required
of Category 3 filers. 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.
Failure to file information required
of Category 4 filers. 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.

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):
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.
Section 6662(j). Penalties may be
imposed for underpayment
attributable to undisclosed foreign
financial asset understatements. The
term “undisclosed foreign financial
asset” with respect to any tax year
includes any asset with respect to
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 with respect to any portion of
an underpayment if the taxpayer can
demonstrate that the failure to comply
was due to reasonable cause with
respect to such portion of the
underpayment and the taxpayer acted
in good faith with respect to such
portion of the underpayment. See
sections 6662(j) and 6664(c) for
additional information.
Failure to comply with a requirement of the gain deferral 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 Temporary Regulations
sections 1.721(c)-3T and 1.721(c)-6T
and section 6038B, may result in an
acceleration event under Temporary
Regulations section 1.721(c)-4T(b)(2)
and a penalty under section 6038B.

Corrections to Form 8865

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
-6-

you originally filed Form 8865. Write
“corrected” at the top of the form and
attach a statement identifying and
explaining the changes.

Specific Instructions

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
separate sheets 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 page 1,
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
filing 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 H6. See
Exceptions to Filing, earlier. Answer
items H8 and H9 only if you are a
Category 1 filer.

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 Schedules O
or P, respectively, transactions that
occurred during that filer's tax year
(rather than during the partnership's
tax year).

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 does not deliver mail
to the street address and the U.S.
Instructions for Form 8865 (2017)

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. Do
not abbreviate the country name.

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.

Item C

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.
"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.
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, Part IV, line 5. For more
information, see the Instructions for
Form 8938, generally, and in
particular, Duplicative Reporting and
Part IV, Excepted Specified Foreign
Financial Assets.

Instructions for Form 8865 (2017)

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.

Item G1

For the foreign partnership's address,
enter the city or town, state or
province, and the foreign country in
that order. Follow the foreign country's
practice in placing the postal code in
the address. Do not 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.

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 with respect to
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 set forth
below.
-7-

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. 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 be used with
respect to 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.
Requirements
The reference ID number that is
entered in item F2(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 with respect to 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.
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.
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.
Note. This correlation requirement
applies only to the first year the new
reference ID number is used.

Item G6. Principal Business
Activity Code
If the foreign partnership filed
Form 1065 or 1065-B. Enter the
business code number (principal
business activity code) shown in item
C of the Form 1065 or 1065-B filed by
the partnership.
If the foreign partnership did not
file Form 1065 or 1065-B. Enter the
applicable principal business activity
code from Codes for Principal
Business Activity and Principal
Product or Service near the end of the
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.

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), attach a statement identifying
each QBU, its country of operation,
and its functional currency. A QBU 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. Under these rules, a
partnership must use the U.S. dollar
as its functional currency.

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. Do not
report the exchange rate as the
number of U.S. dollars that equal one
unit of foreign currency.
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 or Form 1065-B for
the partnership's tax year listed at the
top of page 1 (Form 8865), check the
applicable box and enter the IRS
Service Center where the form was or
will be filed (or enter “e-file” 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 taxable 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
-8-

Tax Return for U.S. Source Income of
Foreign Persons.

Item H6

Note. Only Category 1 and 2 filers
are required to complete item H6.
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
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.

Item H8. Separate Units

Note. Only Category 1 filers (or
indirect partners that are filing the
constructive ownership exception
statement) are required to answer
items H8a and H8b if applicable.
Answer "Yes" to item H8a if the filer is
a domestic corporation and (1) the
partnership is a hybrid entity, or (2)
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 is not
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 H8a is "No," skip item
H8b.
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 H8b, then, for each separate unit
that has a dual consolidated loss,
attach a statement that sets forth (1)
Instructions for Form 8865 (2017)

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 (2) 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 H9

Note. Only Category 1 filers are
required to answer item H9.
Answer “Yes” to item H9 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.

Signature
Filer. Do not 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 are not required to file a
U.S. income tax return. See When
and Where To File, earlier, for more
information.
Paid preparer. Do not 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 return constructively
owns an interest in the foreign
partnership. See Constructive
ownership, earlier.
Instructions for Form 8865 (2017)

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 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.
Related foreign partners. If the
partnership is a section 721(c)
partnership and the gain deferral
method is applied, attach a statement
identifying each direct or indirect
partner that is related to a U.S.
transferor (within the meaning of
section 267(b) or 707(b)(1)) and that
is not a U.S. person (related foreign
partner). The statement must include
the name of the related foreign
partner, the relationship to the U.S.
transferor and the related foreign
partner's interest in the partnership
capital, profits, deductions, or losses.

Schedule A-1. Certain
Partners of Foreign
Partnership

All Category 1 and certain Category 3
filers must complete Schedule A-1.
Any person already listed on
Schedule A is not 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.
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 did not own
a 10% or greater interest in the
transferee partnership after the
-9-

transfer are not required to complete
Schedule A-1.

Schedule A-2. Affiliation
Schedule

All filers must complete Schedule A-2.
List on Schedule A-2 all partnerships
(foreign or domestic) in which the
foreign partnership owned a direct
interest, or a 10% indirect interest
(under the rules of section 267(c)(1)
and (5)) during the partnership tax
year listed at the top of page 1, Form
8865.
Category 1 filers. Only Category 1
filers must complete the 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.

Schedule B. Income
Statement—Trade or
Business Income
Important: You do not need to
complete Schedule B (Form 8865) if
you have attached a copy of Form
1065, page 1, or Form 1065-B, Parts I
and II, filed by the foreign partnership.
All Category 1 filers must complete
Schedule B (Form 8865).

Specific Instructions for
Schedule B

For specific instructions for
Schedule B (Form 8865), use the
instructions for Form 1065, lines 1a
through 21 (income and deductions).
If the foreign partnership files Form
1065-B, use the instructions for Form
1065-B, Parts I and II.
You can view or download the

TIP instructions for Form 1065 or

Form 1065-B at
www.IRS.gov/FormsPubs/. Also,
these instructions can be ordered by
calling 1-800-829-3676
(1-800-TAX-FORM).

Schedule D. Capital Gains
and Losses

Important: All Form 8865 Category 1
filers must complete Schedule D
(Form 1065), Capital Gains and
Losses, to report sales or exchanges
of capital assets, capital gain
distributions, and nonbusiness bad
debts. See the Instructions for
Schedule D (Form 1065). You do not
need to complete a separate
Schedule D (Form 1065) if you have
attached to Form 8865 a copy of the
Schedule D from Form 1065 or Form
1065-B filed by the foreign
partnership.
You can view or download the

TIP Schedule D (Form 1065) and

the Instructions for
Schedule D (Form 1065) at
www.IRS.gov/FormsPubs/. Also, the
form and its instructions can be
ordered by calling 1-800-829-3676
(1-800-TAX-FORM).

Schedules K and K-1.
Partners' Distributive
Share Items
Important: You do not need to
complete Schedules K or K-1 (Form
8865), if you have attached to Form
8865 a copy of the Schedules K or
K-1 from Form 1065 or Form 1065-B
filed by the foreign partnership.

Schedule K

Schedule K (Form 8865) 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.

Schedule K-1

Schedule K-1 (Form 8865) is used to
report a specific partner's share of the
partnership income, deductions,
credits, etc.
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 does not own a direct interest is
not required to complete Form 8865,
Schedule K-1.
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.
Provide the partner's beginning and
year-end percentage interest in
partnership profits, losses, capital, or
deductions. These percentages
should include any interest
constructively owned by the filer.
Complete boxes 1 through 20 for
any direct interest that the partner
owns in the partnership.
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.
Although the partnership is not
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 generally should be
made according to the partnership
agreement. See section 704 and the
regulations thereunder.
Schedule K-1 (Form 8865) for related foreign partners. If the gain
deferral method is applied and a
section 721(c) partnership does not
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 is not a U.S. person
(related foreign partner). See
Temporary Regulations section
1.721(c)-6T(c)(3). The Schedule K-1
(Form 8865) for each related foreign
partner must be filed and attached to
-10-

the Form 8865 as part of the annual
reporting relating to the gain deferral
method pursuant to Temporary
Regulations section 1.721(c)-6T(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.
General Reporting Instructions
for Schedule K-1 (Form 8865)
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.

Item A2

Enter the reference ID number used
on Form 8865, item G2(b). For details,
see the instructions for item G2(b),
earlier.
Codes. In box 11 and boxes 13
through 20, identify each item by
entering a code in the column to the
left of the dollar amount entry space.
These codes are identified on the
back of Schedule K-1 (Form 8865).
Attached statements. Enter an
asterisk (*) after the code, if any, in
the column to the left of the dollar
amount entry space for each item for
which you have attached a statement
providing additional information. For
those informational items that cannot
be reported as a single dollar amount,
enter the code and asterisk in the left
column and write “STMT” in the dollar
amount entry space to indicate the
information is provided on an attached
statement.
More than one attached statement
can be placed on the same sheet of
paper and should be identified in
alphanumeric order by box number
followed by the letter code (if any). For
example: “Box 20, Code T—Depletion
Instructions for Form 8865 (2017)

information—oil and gas” (followed by
the information the partner needs).

U.S. dollars according to Regulations
section 1.985-3(d).

Too few entry spaces on Schedule K-1 (Form 8865)? If there are
more coded items than the number of
spaces in box 11 or boxes 13 through
20, do not enter a code or dollar
amount in the last entry space of the
box. In the last entry space, enter an
asterisk (*) in the left column and
enter “STMT” in the entry space to the
right. Report the additional items on
an attached statement and provide
the box number, the code,
description, and dollar amount or
information for each additional item.
For example: “Box 15, Code J—Work
opportunity credit—$1,000.”

Specific Instructions for
Schedule L

Specific Instructions
for Schedules K and K-1

For the specific instructions for
Schedules K and K-1 (Form 8865),
see the Instructions for Form 1065. If
the foreign partnership files Form
1065-B, use the specific instructions
for Schedules K and K-1 (Form 8865)
in the Instructions for Form 1065-B.

Schedule L. Balance
Sheets per Books
Important: You do not need to
complete Schedule L (Form 8865) if
you have attached to Form 8865 a
copy of the Schedule L from Form
1065 or Form 1065-B filed by the
foreign partnership.
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 Schedule L (Form 8865).
If you answered "Yes" to item H9
on page 1 of Form 8865, you do not
have to complete Schedule L (Form
8865).
Schedule L requires balance
sheets prepared and translated into
U.S. dollars in accordance with U.S.
generally accepted accounting
principles (GAAP).
Exception. If the partnership or
any qualified business unit of the
partnership uses the dollar
approximate separate transactions
method (DASTM), Schedule L (Form
8865) should reflect the tax balance
sheets prepared and translated into
Instructions for Form 8865 (2017)

For the specific instructions for
Schedule L (Form 8865), see the
Instructions for Form 1065. If the
foreign partnership files Form 1065-B,
use the specific instructions for
Schedule L (Form 1065–B) in the
Instructions for Form 1065-B.

Schedule M. Balance
Sheets for Interest
Allocation

All Category 1 filers must complete
Schedule M (Form 8865) and it
should reflect the book values of the
partnership's assets, as described in
Temporary Regulations sections
1.861-9T(g)(2) and 1.861-12T. Assets
should be characterized as U.S.
assets or foreign assets in one or
more separate limitation categories as
provided in Temporary Regulations
sections 1.861-9T(g)(3) and
1.861-12T. The balance sheets
should be prepared in U.S. dollars
under Temporary Regulations section
1.861-9T(g)(2)(ii).
Exception. If the partnership or
any qualified business unit of the
partnership uses DASTM,
Schedule M (Form 8865) should
reflect the tax balance sheet prepared
in U.S. dollars under Regulations
section 1.985-3(d). See Temporary
Regulations section 1.861-9T(g)(2)(ii)
(A)(2) for more information on
DASTM.

Line 2. Enter the partnership's
foreign assets according to the
following income limitation categories.
Passive category.
General category.
Other (attach statement).
See the instructions for Schedule K
(Form 1065), line 16, and section
904(d) for more information.

Schedule M-1.
Reconciliation of Income
(Loss) per Books With
Income (Loss) per Return

Important: You do not need to
complete Schedule M-1 (Form 8865)
if you have attached to Form 8865 a
copy of Schedule M-1 from Form
-11-

1065 or Form 1065-B filed by the
foreign partnership.
Form 8865 filers are not required to
complete Schedule M-3 (Form 1065),
Net Income (Loss) Reconciliation for
Certain Partnerships.
Only Category 1 filers are required
to complete Schedule M-1 (Form
8865). If you answered "Yes" to item
H9 on page 1 of Form 8865, you do
not have to complete Schedule M-1
(Form 8865).

Specific Instructions for
Schedule M-1

For the specific instructions for
Schedule M-1 (Form 8865), see the
Instructions for Form 1065. If the
foreign partnership files Form 1065-B,
use the instructions for Form 1065-B,
Schedule M-1.

Schedule M-2. Analysis of
Partners' Capital Accounts
Important: You do not need to
complete Schedule M-2 (Form 8865),
if you have attached to Form 8865 a
copy of the Schedule M-2 from Form
1065 or Form 1065-B filed by the
foreign partnership.
Only Category 1 filers are required
to complete Schedule M-2 (Form
8865). If you answered "Yes" to item
H9 on page 1 of Form 8865, you do
not have to complete Schedule M-2
(Form 8865).

Specific Instructions
for Schedule M-2

For the specific instructions for Form
8865, Schedule M-2, see the
Instructions for Form 1065. If the
foreign partnership files Form 1065-B,
use the specific instructions for
Schedule M-2 in the Instructions for
Form 1065-B.

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

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 do not
have to complete column (d).
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), do not
report transactions between the
foreign partnership and that person
under column (d). Report the
transactions only under column (b).
Lines 6 and 16. Enter distributions
received from other partnerships and
distributions from the foreign
partnership for which this form is
being completed.
Lines 20 and 21. Enter the largest
outstanding balances during the year
of gross amounts borrowed from, and
gross amounts lent to, the related
parties described in columns (a)
through (d). Do not enter aggregate
cash flows, year-end loan balances,
average balances, or net balances.
Do not 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 O. Transfer
of Property to a
Foreign Partnership

Category 3 filers must complete
Schedule O.
Section 721(c) partnerships.
Temporary Regulations section
1.721(c)-2T 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 Temporary Regulations
section 1.721(c)-3T 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 Temporary Regulations
section 1.721(c)-6T. See Section
721(c) property, Section 721(c)
partnership, U.S. transferor, and Gain
deferral method, earlier.
Reference ID number. Use the
reference ID number shown on Form
8865, item G2(b). For details, see the
instructions for item G2(b), earlier.

Part I. Transfers Reportable
Under Section 6038B

Part I is used to report the transfer of
property to a foreign partnership.
Provide the information required in
columns (a) through (g) with respect
to 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 with respect to 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)).
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). 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 number of
items of property transferred.
Column (c). Enter the FMV of the
property contributed (measured as of
the date of the transfer).
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.
Column (e). 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 with respect to
each item of property. See
-12-

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 generally must be used. See
Temporary Regulations section
1.721(c)-3T(b)(1)(i). For an exception
for certain property generating
effectively connected income, see
Temporary Regulations section
1.721(c)-3T(b)(1)(ii).
Column (f). Enter the amount of
gain, if any, recognized on the
transfer. See sections 721(b), 904(f)
(3), and Temporary Regulations
section 1.721(c)-2T.
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 deductions
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 a statement titled
“Statement of Application of the Gain
Deferral Method under Section
721(c)” containing the information
described in Temporary Regulations
1.721(c)-6T(b)(2)(i). See Temporary
Instructions for Form 8865 (2017)

Regulations 1.721(c)-6T(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.
Form 8838-P, Consent To Extend
the Time To Assess Tax Pursuant to
the Gain Deferral Method (Section
721(c)). See Temporary Regulations
sections 1.721(c)-6T(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)- 6T,” if applicable. See
Temporary Regulations section
1.721(c)-6T(c)(1).
Annual Reporting With Respect
to the Gain Deferral Method
A U.S. transferor subject to the gain
deferral method must annually attach
to Form 8865 a statement titled
“Annual Statement of Application of
the Gain Deferral Method under
Section 721(c)” containing the
information required in Temporary
Regulations section 1.721(c)-6T(b)(3)
(i) through (vii) (and (b)(3)(ix), as
applicable. See Temporary
Regulations section 1.721(c)-6T(b)(3)
for further annual reporting
requirements pursuant to the gain
deferral method.

Part II. Dispositions Reportable
Under Section 6038B

Use Part II to report certain
dispositions by a foreign partnership.
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.
A disposition by a partnership may
be an acceleration event for purposes
Instructions for Form 8865 (2017)

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 Temporary
Regulations section 1.721(c)-4T. For
acceleration event exceptions, see
Temporary Regulations section
1.721(c)-5T. Acceleration events and
exceptions to an acceleration event
should be reflected in Part II.
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.” 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.” 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.
Column (c). Enter the date that the
partnership disposed of the property.
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 (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).

-13-

Column (g). Enter the amount of
gain from column (e) allocated to you.
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
calculating the amount of recapture.
See Regulations section 1.1254-5.

Part III. Gain Recognition Under
Section 904(f)(3) or (f)(5)(F)
If gain recognition was required with
respect to any transfer reported in
Part I under section 904(f)(3) and (f)
(5)(F), attach a statement identifying
the transfer and the amount of gain
recognized.

Schedule P. Acquisitions,
Dispositions, and Changes
of Interests in a Foreign
Partnership

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

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.
An acquisition of a section 721(c)
partnership interest may be an
acceleration event exception under
the gain deferral method. See
Temporary Regulations section
1.721(c)-5T. In this case, the acquirer
may become a successor U.S.
transferor and may have a reporting
requirement under Temporary
Regulations section 1.721(c)-6T. See
Section 721(c) partnership, Gain
deferral method, and U.S. transferor,
earlier.
Column (a). If you acquired the
interest in the foreign partnership by
purchase, gift, 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 (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.
Column (c). Enter the FMV of the
interest you acquired in the
partnership (measured as of the date
of acquisition).
Column (d). Enter your basis in the
acquired partnership interest
(measured as of the date of
acquisition). See sections 722 and
742.
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 II. Dispositions

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 with
respect to the disposition.
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 Temporary
Regulations section 1.721(c)-4T. For
acceleration event exceptions, see
Temporary Regulations section
1.721(c)-5T.
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.
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.
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 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.

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.
Column (a). Briefly describe the
event that caused your interest in the
partnership to change (for example,
the admission of a new partner).
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.
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 IV. Supplemental
Information Required
To Be Reported

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.

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 Internal Revenue Service 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 possessions for use in
administering their tax laws. We may also disclose this information to other countries under a tax treaty, to federal and
-14-

Instructions for Form 8865 (2017)

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.

8865
Schedule K-1 (Form 8865)
Schedule O (Form 8865)
Schedule P (Form 8865)

66 hr., 58 min.
13 hr., 38 min.
12 hr., 12 min.
 5 hr., 15 min.

23 hr., 11 min.
41 min.
2 hr., 22 min.
35 min.

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

Learning about the
law or the form

Recordkeeping

.

Form

36 hr., 5 min.
57 min.
2 hr., 41 min.
42 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 your comments from www.IRS.gov/
FormsPubs/. Click on “More Information” and then on “Give us feedback.” 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 (2017)

-15-

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.

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
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

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

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
315220 Men's & Boys' Cut & Sew
Apparel Mfg
315240 Women's, Girls' & Infants' Cut
& Sew Apparel Mfg
315280 Other Cut & Sew Apparel Mfg
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

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 H6. Also enter a brief
description of the business activity in item H7.

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

-16-

332900 Other Fabricated Metal
Product Mfg
Machinery Manufacturing
333100 Agriculture, Construction, &
Mining Machinery Mfg
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 Major 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

Codes for Principal Business Activity and Principal Product or Service (Continued)
423700 Hardware, & Plumbing &
Heating Equipment &
Supplies
423800 Machinery, Equipment, &
Supplies
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 & Tobacco Products
424950 Paint, Varnish, & Supplies
424990 Other Miscellaneous
Nondurable Goods
Wholesale Electronic Markets and
Agents and Brokers
425110 Business to Business
Electronic Markets
425120 Wholesale Trade Agents &
Brokers

Retail Trade

Motor Vehicle and Parts Dealers
441110 New Car Dealers
441120 Used Car Dealers
441210 Recreational Vehicle Dealers
441222 Boat Dealers
441228 Motorcycle, ATV, & All other
Motor Vehicle Dealers
441300 Automotive Parts,
Accessories, & Tire Stores
Furniture and Home Furnishings
Stores
442110 Furniture Stores
442210 Floor Covering Stores
442291 Window Treatment Stores
442299 All Other Home Furnishings
Stores
Electronics and Appliance Stores
443141 Household Appliance Stores
443142 Electronic Stores (including
Audio, Video, Computer, &
Camera Stores)
Building Material and Garden
Equipment and Supplies Dealers
444110 Home Centers
444120 Paint & Wallpaper Stores
444130 Hardware Stores
444190 Other Building Material
Dealers
444200 Lawn & Garden Equipment &
Supplies Stores
Food and Beverage Stores
445110 Supermarkets and Other
Grocery (except
Convenience) Stores
445120 Convenience Stores
445210 Meat Markets
445220 Fish & Seafood Markets
445230 Fruit & Vegetable Markets
445291 Baked Goods Stores
445292 Confectionery & Nut Stores
445299 All Other Specialty Food
Stores

445310 Beer, Wine, & Liquor Stores
Health and Personal Care Stores
446110 Pharmacies & Drug Stores
446120 Cosmetics, Beauty Supplies,
& Perfume Stores
446130 Optical Goods Stores
446190 Other Health & Personal Care
Stores
Gasoline Stations
447100 Gasoline Stations (including
convenience stores with gas)
Clothing and Clothing Accessories
Stores
448110 Men's Clothing Stores
448120 Women's Clothing Stores
448130 Children's & Infants' Clothing
Stores
448140 Family Clothing Stores
448150 Clothing Accessories Stores
448190 Other Clothing Stores
448210 Shoe Stores
448310 Jewelry Stores
448320 Luggage & Leather Goods
Stores
Sporting Goods, Hobby, Book, and
Music Stores
451110 Sporting Goods Stores
451120 Hobby, Toy, & Game Stores
451130 Sewing, Needlework, & Piece
Goods Stores
451140 Musical Instrument &
Supplies Stores
451211 Book Stores
451212 News Dealers & Newsstands
General Merchandise Stores
452200 Department Stores
452300 General Merchandise Stores,
incl. Warehouse Clubs and
Supercenters
Miscellaneous Store Retailers
453110 Florists
453210 Office Supplies & Stationery
Stores
453220 Gift, Novelty, & Souvenir
Stores
453310 Used Merchandise Stores
453910 Pet & Pet Supplies Stores
453920 Art Dealers
453930 Manufactured (Mobile) Home
Dealers
453990 All Other Miscellaneous Store
Retailers (including tobacco,
candle, & trophy shops)
Nonstore Retailers
454110 Electronic Shopping &
Mail-Order Houses
454210 Vending Machine Operators
454310 Fuel Dealers (including
Heating Oil and Liquefied
Petroleum)
454390 Other Direct Selling
Establishments (including
door-to-door retailing, frozen
food plan providers, party
plan merchandisers, &
coffee-break service
providers)

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
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
492210 Local Messengers & Local
Delivery
Warehousing and Storage
493100 Warehousing & Storage
(except lessors of
mini-warehouses &
self-storage units)

Information

Publishing Industries (except
Internet)
511110 Newspaper Publishers
511120 Periodical Publishers
511130 Book Publishers
511140 Directory & Mailing List
Publishers
511190 Other Publishers
511210 Software Publishers
Motion Picture and Sound
Recording Industries
512100 Motion Picture & Video
Industries (except video
rental)
512200 Sound Recording Industries
Broadcasting (except Internet)
515100 Radio & Television
Broadcasting
515210 Cable & Other Subscription
Programming
Telecommunications
517000 Telecommunications
(including paging, cellular,
satellite, cable & other
program distribution,
resellers, & other
telecommunications, and
Internet service providers)
Data Processing Services
518210 Data Processing, Hosting, &
Related Services
Other Information Services
519100 Other Information Services
(including news syndicates &
libraries, Internet publishing &
broadcasting)

Finance and Insurance

Depository Credit Intermediation
522110 Commercial Banking
522120 Savings Institutions
522130 Credit Unions
522190 Other Depository Credit
Intermediation
Nondepository Credit
Intermediation
522210 Credit Card Issuing
522220 Sales Financing
522291 Consumer Lending

-17-

522292 Real Estate Credit (including
mortgage bankers &
originators)
522293 International Trade Financing
522294 Secondary Market Financing
522298 All Other Nondepository
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
523110 Investment Banking &
Securities Dealing
523120 Securities Brokerage
523130 Commodity Contracts
Dealing
523140 Commodity Contracts
Brokerage
523210 Securities & Commodity
Exchanges
523900 Other Financial Investment
Activities (including portfolio
management & investment
advice)
Insurance Carriers and Related
Activities
524140 Direct Life, Health, & Medical
Insurance & Reinsurance
Carriers
524150 Direct Insurance &
Reinsurance (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, U.S. Income
Tax Return for Regulated
Investment Companies)
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.

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

Codes for Principal Business Activity and Principal Product or Service (Continued)
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
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

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
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 & 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

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

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
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 Child Day Care Services

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

-18-

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 & Buffets
722515 Snack & Nonalcoholic
Beverage Bars

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)

Index
10% interest 5
50% interest 5
A
Acquisitions 3
Analysis of partners' capital
accounts 11
B
Balance sheets per books 11
C
Categories of Filers 2
Category 1 filer 2, 8, 9
Category 2 filer 2, 8
Category 3 filer 2, 8, 9
Category 4 filer 3, 8
Change in a Proportional
Interest 5

Changes in Proportional
Interests 3
Consolidated Return 7
Constructive Ownership 5
Control of a Corporation 5
Corrections to Form 8865 6
D
Definitions 4
Dispositions 3
E
Exceptions to Filing 3
F
Foreign Address 7
Foreign Partnership 5

G
General Reporting Instructions for
Schedule K-1 10
H
Hyperinflationary Exception 8
I
Identifying Numbers and
Addresses 6
P
Partnership 4
Penalties 5
Purpose of Form 1
R
Relief for Category 1 and 2 filers 4

-19-

S
Schedule B–Income Statement–
Trade or Business Income 9
Schedules K and K-1–Partners'
Shares of Income, Deductions,
Credits, Etc. 10
T
Tax Year 6
Treaty-based Return Positions 6
U
U.S. Person 5
W
When To File 4
Who Must File 1