1042 Schedule Q Tax Liability of Qualified Derivatives Dealer (QDD)

SCHEDULE Q
(Form 1042)

OMB No. 1545-0096

Tax Liability of Qualified Derivatives Dealer (QDD)

2023

Attach to Form 1042.

Department of the Treasury
Internal Revenue Service

Go to www.irs.gov/Form1042 for the latest information.

Name of taxpayer

Employer identification number

Name of QDD

QI-EIN

QDD Tax Year (enter month, day, and year for beginning and ending dates)
Beginning

, 20

, and ending

, 20

.

Indicate the year or portion of the year to which the schedule relates (enter month, day, and year beginning
and ending dates)
Beginning

, 20

, and ending

, 20

Total section 871(m) amount . . . . . . . . . . . .
Total dividends received in equity derivatives dealer capacity . .
Total QDD tax liability pursuant to section 3.09(A) of the Qualified
Intermediary Agreement . . . . . . . . . . . . . .
4
Total QDD tax liability pursuant to section 3.09(B) of the Qualified
Intermediary Agreement . . . . . . . . . . . . . .
5
Total QDD tax liability pursuant to section 3.09(C) of the Qualified
Intermediary Agreement:
a Income Type
b Income Type
c Income Type
d Income Type
6
Total of line 5 amounts . . . . . . . . . . . . . .

of

.
(a)
Gross Amount

Summary of QDD Tax Liability
1
2
3

Schedule

(b)
Withholding
Tax Rate

(c)
Amount of
Tax Liability (column
(a) x column (b))

1
2
3
4

5a
5b
5c
5d
6

What’s New

Specific Instructions

Schedule Q (Form 1042) has been amended to reflect Notice 2022-37, 2022-37
I.R.B. 234, which further delays the effective/applicability date of certain rules in
the section 871(m) regulations and extends the phase-in period provided in Notice
2020-2, 2020-3 I.R.B. 327, for certain provisions of the section 871(m) regulations.

Name of QDD. The name of the QDD should follow the naming protocol used for
applying to be a QDD.

In addition, the qualified intermediary agreement in Rev. Proc. 2017-15, 2017-3
I.R.B. 437, expired December 31, 2022, and the QIA (as defined below) in Rev.
Proc. 2022-43, 2022-52 I.R.B. 570, applies beginning January 1, 2023. Under the
QIA, QDD Partnerships (as defined below) must also complete Schedule(s) Q
(Form 1042).

Who Must File
If the taxpayer or any branch of the taxpayer was a qualified derivatives dealer
(QDD) (defined below) during the tax year, Schedule Q must be completed and
filed for each of those QDDs. The taxpayer must file Schedule Q as an attachment
to Form 1042 even if the QDD has zero tax liability.
Qualified derivatives dealer (QDD). A QDD is a home office or branch that, in
accordance with the qualified intermediary agreement (QIA) (defined below),
qualifies and has been approved for QDD status and satisfies the requirements of
the QIA. See the QIA for additional information.
Qualified intermediary agreement (QIA). The QIA is section 6 of Rev. Proc.
2022-43, 2022-52 I.R.B. 570.
QDD Partnerships. If a partnership is, or has a branch that is, a QDD (a “QDD
Partnership”), then it must complete Schedule(s) Q.

General Instructions
A separate Schedule Q is required for each QDD. In addition, if a taxpayer has a
fiscal year rather than a calendar year, the taxpayer must provide a separate
Schedule Q for each QDD for each portion of the fiscal year that falls within the
calendar year.
Example. A QDD with a fiscal year beginning September 1 and ending August
31 would complete two schedules (one for the period of January 1, 2023, through
August 31, 2023, and one for the period of September 1, 2023, through December
31, 2023).

For Paperwork Reduction Act Notice, see the Instructions for Form 1042.

Number of schedules filed. A QDD may be required to file multiple Schedules Q,
for example, if it has multiple branches that are QDDs or if it is a fiscal year
taxpayer (as explained in General Instructions above). Indicate the number of each
Schedule Q filed, as well as the total number of Schedules Q being filed by the
taxpayer in the entry spaces provided.
Partnerships. A QDD Partnership must complete Schedule(s) Q taking into
account the partnership specific adjustments specified in section 3.09 of the QIA.
Column (c), Amount of Tax Liability. Except as provided in the Note immediately
below, the amount in column (c) is determined by multiplying column (a) by column
(b). This column is not reduced by any withholding that has occurred.
Note: For calendar years 2018 through 2024, certain information is not required,
as indicated in the line instructions below. However, if the taxpayer has a fiscal
year rather than a calendar year, that begins in 2024 and ends in 2025, information
is required for any amounts paid or accrued on or after January 1, 2025.
Line 1. The gross amount to be entered in column (a) is the sum of each section
871(m) amount for the QDD for the relevant period. See section 2.73 of the QIA for
the definition of section 871(m) amount.
Note: For calendar years 2019 through 2024, this information is not required.
Line 2. For calendar years 2019 through 2024, only the gross amount (column (a))
and tax rate (column (b)) are required.
Line 3. Column (c) is the sum of each section 3.09(A) amount for the QDD for the
relevant period.
Note: For calendar years 2019 through 2024, this information is not required.
Line 4. Enter the information requested in columns (a), (b), and (c).
Line 5. In addition to specifying the type of income (for example, dividends or
interest), enter the information requested in columns (a), (b), and (c) separately for
each income type. For dividends, include all dividends, including dividends
separately stated on line 2.
Note: For calendar years 2019 through 2024, do not include dividends included on
line 2.
Cat. No. 71805T

Schedule Q (Form 1042) 2023