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

Version A, Cycle 4

SCHEDULE Q
(Form 1042)

OMB No. 1545-0096

Tax Liability of Qualified Derivatives Dealer (QDD)

2024

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

INTERNAL USE ONLY
DRAFT AS OF
August 13, 2024

What’s New

Schedule Q (Form 1042) has been amended to reflect Notice 2024-44, 2024-25
I.R.B. 1737, 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
2022-37, 2022-37 I.R.B. 234, for certain provisions of the section 871(m)
regulations.

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.

4

5a
5b
5c
5d
6

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 (b), Withholding Tax Rate. In the case of a QDD Partnership, this column
should be completed reflecting the weighted average applicable withholding tax
rate of the partners. The weighted average applicable withholding tax rate of the
partners is determined by adding the product of each partner’s percentage of the
allocations of the applicable item by that partner’s applicable withholding tax rate.
The withholding tax rate of a U.S. partner is zero, unless it is a partnership with
direct or indirect foreign partners.
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. In the case
of a QDD Partnership, this column should reflect the total tax liability of the
partners.
Note: For calendar years 2018 through 2026, 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 2026 and ends in 2027, information
is required for any amounts paid or accrued on or after January 1, 2027.
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 2026, this information is not required.
Line 2. For calendar years 2019 through 2026, only the gross amount (column (a))
and tax rate (column (b)) are required.

Example. A QDD with a fiscal year beginning September 1 and ending August
31 would complete two schedules (one for the period of September 1, 2024,
through December 31, 2024, and one for the period of January 1, 2025, through
August 31, 2025).

Line 3. Column (c) is the sum of each section 3.09(A) amount for the QDD for the
relevant period.

Specific Instructions

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.

Name of QDD. The name of the QDD should follow the naming protocol used for
applying to be a QDD.
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, earlier). Indicate the number of each

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

Note: For calendar years 2019 through 2026, this information is not required.
Line 4. Enter the information requested in columns (a), (b), and (c).

Note: For calendar years 2019 through 2026, do not include dividends included on
line 2.
Cat. No. 71805T

Schedule Q (Form 1042) 2024