Form 8865 PDF Details

Form 8865 is used to report income and expenses from a foreign partnership. This form is used to calculate the amount of tax owed on that income. The instructions for Form 8865 can be complicated, so it's important to understand how to complete the form correctly. In this blog post, we'll provide a overview of Form 8865 and explain how to complete it correctly. We'll also provide some tips for avoiding common mistakes. So if you have foreign partnership income, make sure to read this blog post!

Question	Answer
Form Name	Form 8865
Form Length	6 pages
Fillable?	No
Fillable fields	0
Avg. time to fill out	1 min 30 sec
Other names	the 8865, 2020 form 8865, irs 8865, form 8865 instructions 2020

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Form 8865

Return of U.S. Persons With Respect to

OMB No. 1545-1668

Certain Foreign Partnerships

2021

▶ Attach to your tax return.

▶ Go to www.irs.gov/Form8865 for instructions and the latest information.

Department of the Treasury

Information furnished for the foreign partnership’s tax year

Attachment

Internal Revenue Service

beginning

, 2021, and ending

, 20

Sequence No. 865

Name of person filing this return

Filer’s identification number

Filer’s address (if you aren’t filing this form with your tax return)

A Category of filer (see Categories of Filers in the instructions and check applicable box(es)):

B Filer’s tax year beginning

, 20

, and ending

, 20

Filer’s share of liabilities: Nonrecourse $

Qualified nonrecourse financing $

Other $

If filer is a member of a consolidated group but not the parent, enter the following information about the parent:

Name

EIN

Address

Check if any excepted specified foreign financial assets are reported on this form. See instructions

Information about certain other partners (see instructions)

(1) Name

(2) Address

(3) Identification number

(4) Check applicable box(es)

Category 1

Category 2

Constructive owner

G1 Name and address of foreign partnership

2(a) EIN (if any)

2(b) Reference ID number (see instructions)

3 Country under whose laws organized

4Date of organization

5Principal place of business

6Principal business activity code number

7Principal business activity

8a Functional currency

8b Exchange rate (see instructions)

HProvide the following information for the foreign partnership’s tax year:

1	Name, address, and identification number of agent (if any) in the	2	Check if the foreign partnership must file:
	United States		Form 1042	Form 8804	Form 1065
			Form 1042	Form 8804	Form 1065
			Service Center where Form 1065 is filed:

3	Name and address of foreign partnership’s agent in country of	4	Name and address of person(s) with custody of the books and records of the
	organization, if any		foreign partnership, and the location of such books and records, if different

5During the tax year, did the foreign partnership pay or accrue any interest or royalty for which the deduction is not

	allowed under section 267A? See instructions	.	.	.	.	.	▶
	If “Yes,” enter the total amount of the disallowed deductions	.	.	.	.	.	▶ $
6	Is the partnership a section 721(c) partnership, as defined in Regulations section 1.721(c)-1(b)(14)? .	.	.	.	.	.	▶
7	Were any special allocations made by the foreign partnership?	.	.	.	.	.	▶

8Enter the number of Forms 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities

	(FDEs) and Foreign Branches (FBs), attached to this return. See instructions	. .	. .	. . . . . . . . ▶
9	How is this partnership classified under the law of the country in which it’s organized?		.	▶

Yes

Yes Yes

No No

10a Does the filer have an interest in the foreign partnership, or an interest indirectly through the foreign partnership, that’s a separate unit under Regulations section 1.1503(d)-1(b)(4) or part of a combined separate unit under Regulations section 1.1503(d)-1(b)(4)(ii)? If “No,” skip question 10b . . . . . . . . . . . . . . . . . . . . . ▶

bIf “Yes,” does the separate unit or combined separate unit have a dual consolidated loss, as defined in Regulations

	section 1.1503(d)-1(b)(5)(ii)?	. .		.	.	.	.	.	▶
11	Does this partnership meet both of the following requirements?	}
	1. The partnership’s total receipts for the tax year were less than $250,000.
	2. The value of the partnership’s total assets at the end of the tax year was less than $1 million.		.	.	.	.	.	.	▶
	If “Yes,” don’t complete Schedules L, M-1, and M-2.

Yes

For Privacy Act and Paperwork Reduction Act Notice, see the separate instructions.

Cat. No. 25852A

Form 8865 (2021)

Form 8865 (2021)	Page 2

12a Is the filer of this Form 8865 claiming a foreign-derived intangible income deduction (under section 250) with respect to any amounts listed on Schedule N? . . . . . . . . . . . . . . . . . . . . . . . . ▶

bIf “Yes,” enter the amount of gross income derived from sales, leases, exchanges, or other dispositions (but not licenses) from transactions with or by the foreign partnership that the filer included in its computation of foreign-derived deduction

eligible income (FDDEI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . ▶

cIf “Yes,” enter the amount of gross income derived from a license of property to or by the foreign partnership that the

filer included in its computation of FDDEI . . . . . . . . . . . . . . . . . . . . . . . ▶

dIf “Yes,” enter the amount of gross income derived from services provided to or by the foreign partnership that the filer

included in its computation of FDDEI . . . . . . . . . . . . . . . . . . . . . . . . ▶

13Enter the number of foreign partners subject to section 864(c)(8) as a result of transferring all or a portion of an interest in the partnership or of receiving a distribution from the partnership . . . . . . . . . . . . . . . . ▶

Yes

14At any time during the tax year were any transfers between the partnership and its partners subject to the disclosure

requirements of Regulations section 1.707-8?. . . . . . . . . . . . . . . . . . . . . . ▶

15a Were there any transfers of property or money within a 2-year period between the partnership and any of its partners that

would require disclosure under Regulations section 1.703-3 or 1.707-6? If “Yes,” attach a statement identifying	the
transfers, the amount or value of each transfer, and an explanation of the tax treatment. See instructions for exceptions	▶

bDid the partnership assume a liability or receive property subject to a liability where such liability was incurred by a partner within a 2-year period of transferring the property to the partnership? If “Yes,” attach a statement identifying the property transferred,

the amount or value of each transfer, the debt assumed or taken by the partnership, and an explanation of the tax treatment ▶

Yes

Sign Here Only if You’re Filing This Form Separately and Not With Your Tax Return.

Paid

Preparer

Use Only

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than general partner or limited liability company member) is based on all information of which preparer has any knowledge.

▲			▲
▲	Signature of general partner or limited liability company member		▲	Date
Print/Type preparer’s name		Preparer’s signature	Date		Check	if	PTIN
Print/Type preparer’s name		Preparer’s signature	Date				PTIN

					self-employed

Firm’s name ▶					Firm’s EIN ▶
Firm’s address ▶					Phone no.

Schedule A Constructive Ownership of Partnership Interest. Check the boxes that apply to the filer. If you check box b, enter the name, address, and U.S. taxpayer identification number (if any) of the person(s) whose interest you constructively own. See instructions.

Owns a direct interest

Owns a constructive interest

Name

Address

Identification number (if any)

Check if

foreign person

Check if

direct

partner

Schedule A-1 Certain Partners of Foreign Partnership (see instructions)

Name

Address

Identification number (if any)

Check if

foreign person

Schedule A-2 Foreign Partners of Section 721(c) Partnership (see instructions)

Name of foreign		Country of	U.S. taxpayer	Check if related to	Percentage interest
	Address	organization	identification number		Percentage interest

partner				U.S. transferor	Capital	Profits
partner		(if any)	(if any)	U.S. transferor
		(if any)	(if any)
					%		%
					%		%
Does the partnership have any other foreign person as a direct partner? . . . .				. . . . . . . . . .		Yes	No

Schedule A-3 Affiliation Schedule. List all partnerships (foreign or domestic) in which the foreign partnership owns a direct interest or indirectly owns a 10% interest.

Name

Address

EIN

(if any)

Total ordinary income or loss

Check if

foreign

partnership

Form 8865 (2021)

Form 8865 (2021)													Page 3

Schedule B				Income Statement—Trade or Business Income
Caution: Include only trade or business income and expenses on lines 1a through 22 below. See the instructions for more information.

		1 a	Gross receipts or sales					1a
		b	Less returns and allowances					1b				1c
Income	2		Cost of goods sold					. . . . . . . . .				2
Income	5		Net farm profit (loss) (attach Schedule F (Form 1040))					. . . . . . . . .				5
	3		Gross profit. Subtract line 2 from line 1c					. . . . . . . . .				3
	4		Ordinary income (loss) from other partnerships, estates, and trusts (attach statement) . . . .									4
			Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) .					. . . . . . . . .
	6							. . . . . . . . .				6
	7		Other income (loss) (attach statement)					. . . . . . . . .				7
	8		Total income (loss). Combine lines 3 through 7					. . . . . . . . .				8
limitations)	9		Salaries and wages (other than to partners) (less employment credits)					. . . . . . . . .				9
limitations)	10		Guaranteed payments to partners					. . . . . . . . .				10
	10		Guaranteed payments to partners					. . . . . . . . .				10
	11		Repairs and maintenance					. . . . . . . . .				11
for	12		Bad debts					. . . . . . . . .				12
for	13		Rent					. . . . . . . . .				13
instructions	13		Rent					. . . . . . . . .				13
instructions	14		Taxes and licenses					. . . . . . . . .				14
	14		Taxes and licenses					. . . . . . . . .				14
	15		Interest (see instructions)					. . . . . . . . .				15
(see	16 a		Depreciation (if required, attach Form 4562)					16a
(see		b	Less depreciation reported elsewhere on return					16b				16c
Deductions		b	Less depreciation reported elsewhere on return					16b				16c
Deductions	17		Depletion (Don’t deduct oil and gas depletion.)					. . . . . . . . .				17
	17		Depletion (Don’t deduct oil and gas depletion.)					. . . . . . . . .				17
	18		Retirement plans, etc					. . . . . . . . .				18
	19		Employee benefit programs					. . . . . . . . .				19
	20		Other deductions (attach statement)					. . . . . . . . .				20
	21		Total deductions. Add the amounts shown in the far right column for lines 9 through 20 . . .									21
	22		Ordinary business income (loss) from trade or business activities. Subtract line 21 from line 8 .									22
Payment	23		Reserved for future use					. . . . . . . . .				23
Payment	24		Reserved for future use					. . . . . . . . .				24
	25		Reserved for future use					. . . . . . . . .				25
	26		Reserved for future use					. . . . . . . . .				26
and	27		Reserved for future use					. . . . . . . . .				27
and	28		Reserved for future use					. . . . . . . . .				28
Tax	29		Reserved for future use					. . . . . . . . .				29
	30		Reserved for future use					. . . . . . . . .				30
Schedule K				Partners’ Distributive Share Items									Total amount
		1		Ordinary business income (loss) (Schedule B, line 22)				. . . . . . . . .				1
		2		Net rental real estate income (loss) (attach Form 8825) . . . .				. . . . . . . . .				2
		3a		Other gross rental income (loss)				3a
		b		Expenses from other rental activities (attach statement) . . . .				3b
		c		Other net rental income (loss). Subtract line 3b from line 3a . . .				. . . . . . . . .				3c
		4		Guaranteed payments: a Services	4a		b Capital	4b
(Loss)		c		Total. Add line 4a and line 4b				. . . . . . . . .				4c
		c		Total. Add line 4a and line 4b				. . . . . . . . .				4c
		5		Interest income				. . . . . . . . .				5
Income		6		Dividends and dividend equivalents: a		Ordinary dividends . .		. . . . . . . . .				6a
Income		7		Royalties				. .	. . . . . . .			7
					b	Qualified dividends . .		6b
					c	Dividend equivalents . .		6c
				Net short-term capital gain (loss) (attach Schedule D (Form 1065)) .				. . . . . . . . .
		8						. . . . . . . . .				8
		9a		Net long-term capital gain (loss) (attach Schedule D (Form 1065)) .				. . . . . . . . .				9a
		b		Collectibles (28%) gain (loss)				9b
		c		Unrecaptured section 1250 gain (attach statement)				9c
		10		Net section 1231 gain (loss) (attach Form 4797)				. . . . . . . . .				10
		11		Other income (loss) (see instructions) (1)		Type ▶		(2)		Amount	▶	11(2)
Deductions		d		Other deductions (see instructions) (1)		Type ▶		(2)		Amount	▶	13d(2)
		12		Section 179 deduction (attach Form 4562)				. . . . . . . . .				12
		13a		Contributions				. . . . . . . . .				13a
		b		Investment interest expense				. . . . . . . . .				13b
		c		Section 59(e)(2) expenditures:	(1)	Type ▶		(2)		Amount	▶	13c(2)

Form 8865 (2021)

Schedule K				Partners’ Distributive Share Items (CONTINUED)
	-		14a	Net earnings (loss) from self-employment
Self-	Employ	ment	14a	Net earnings (loss) from self-employment
Self-	Employ	ment	c	Gross nonfarm income
			b	Gross farming or fishing income
			15a	Low-income housing credit (section 42(j)(5))
	Credits		b	Low-income housing credit (other)
	Credits		c	Qualified rehabilitation expenditures (rental real estate) (attach Form 3468)
			c
			d	Other rental real estate credits (see instructions)		Type ▶
			e	Other rental credits (see instructions)		Type ▶
			f	Other credits (see instructions)		Type ▶
International Transactions			16	Attach Schedule K-2 (Form 8865), Partners’ Distributive Share Items—International, and check
International Transactions				this box to indicate that you are reporting items of international tax relevance


Alternative	TaxMinimum	Items(AMT)	17a	Post-1986 depreciation adjustment
Alternative	TaxMinimum	Items(AMT)	b	Adjusted gain or loss
			b	Adjusted gain or loss
			c	Depletion (other than oil and gas)
			d	Oil, gas, and geothermal properties—gross income
			e	Oil, gas, and geothermal properties—deductions
			f	Other AMT items (attach statement)
	Information		18a	Tax-exempt interest income
	Information		b	Other tax-exempt income
			b	Other tax-exempt income
			c	Nondeductible expenses
			19a	Distributions of cash and marketable securities
			b	Distributions of other property
	Other		20a	Investment income	. . . . . . . . . . . . . . . . . . . . . . . .
	Other		b	Investment expenses
			b	Investment expenses
			c	Other items and amounts (attach statement)
			21	Total foreign taxes paid or accrued

Page 4

Total amount

14a

14b

14c

15a

15b

15c

15d

15e

15f

17a

17b

17c

17d

17e

17f

18a

18b

18c

19a

19b

20a

20b

Schedule L Balance Sheets per Books. (Not required if Item H11, page 1, is answered “Yes.”)

	Assets
1	Cash
2a	Trade notes and accounts receivable . . .
b	Less allowance for bad debts
3	Inventories
4	U.S. Government obligations
5	Tax-exempt securities

6Other current assets (attach statement) . . .

7a Loans to partners (or persons related to partners)

b	Mortgage and real estate loans
8	Other investments (attach statement) . . .
9a	Buildings and other depreciable assets . . .
b	Less accumulated depreciation
10a	Depletable assets
b	Less accumulated depletion

11Land (net of any amortization) . . . . . .

12a Intangible assets (amortizable only) . . . .

b Less accumulated amortization . . . . .

Beginning of tax year			End of tax year
(a)	(b)	(c)		(d)

Form 8865 (2021)

Form 8865 (2021)	Page 5

Schedule L	Balance Sheets per Books. (Not required if Item H11, page 1, is answered “Yes.”) (CONTINUED)

13	Other assets (attach statement) . . . .

14Total assets . . . . . . . . . . .

Liabilities and Capital

15Accounts payable . . . . . . . . .

16Mortgages, notes, bonds payable in less than 1 year

17	Other current liabilities (attach statement) .

18All nonrecourse loans . . . . . . . .

19a Loans from partners (or persons related to partners) b Mortgages, notes, bonds payable in 1 year or more

20Other liabilities (attach statement) . . . .

21	Partners’ capital accounts
22	Total liabilities and capital

Beginning of tax year			End of tax year
(a)	(b)	(c)		(d)

Schedule M Balance Sheets for Interest Allocation

1	Total U.S. assets

2Total foreign assets:

a	Passive category
b	General category
c	Other (attach statement)

(a)

Beginning of

tax year

(b)

End of

tax year

Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return. (Not required if Item H11, page 1, is answered “Yes.”)

1Net income (loss) per books .

2Income included on Schedule K, lines 1, 2, 3c, 5, 6a, 7, 8, 9a, 10, and 11, not recorded on books this tax year (itemize):

3Guaranteed payments (other than health insurance) . . .

4Expenses recorded on books this tax year not included on Schedule K, lines 1 through 13d, and 21 (itemize):

aDepreciation $

bTravel and entertainment $

5 Add lines 1 through 4 . . .

6Income recorded on books this tax year not included on Schedule K, lines 1 through 11 (itemize):

aTax-exempt interest $

7Deductions included on Schedule K, lines 1 through 13d, and 21, not charged against book income this tax year (itemize):

aDepreciation $

8 Add lines 6 and 7 . . . . .

9Income (loss). Subtract line 8 from line 5 . . . . . . .

Schedule M-2 Analysis of Partners’ Capital Accounts. (Not required if Item H11, page 1, is answered “Yes.”)

1Balance at beginning of tax year

2Capital contributed:

a Cash . . .

b Property . .

3Net income (loss) per books .

4Other increases (itemize): $

5Add lines 1 through 4 . . .

6 Distributions: a Cash . . .

b Property . .

7Other decreases (itemize): $

8 Add lines 6 and 7 . . . . .

9Balance at end of tax year.

Subtract line 8 from line 5 . .

Form 8865 (2021)

Form 8865 (2021)	Page 6

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

Important: Complete a separate Form 8865 and Schedule N for each controlled foreign partnership. Enter the totals for each type of transaction that occurred between the foreign partnership and the persons listed in columns (a) through (d).

		Transactions						(b) Any domestic	(c) Any other foreign	(d) Any U.S. person with a
		Transactions					(a) U.S. person	corporation or partnership	corporation or partnership	10% or more direct interest
			of				(a) U.S. person	controlling or controlled	controlling or controlled	in the controlled foreign
			of				filing this return	controlling or controlled	controlling or controlled	in the controlled foreign
	foreign partnership						filing this return	by the U.S. person filing	by the U.S. person filing	partnership (other than the
	foreign partnership							by the U.S. person filing	by the U.S. person filing	partnership (other than the
								this return	this return	U.S. person filing this return)

1	Sales of inventory . . . .
2	Sales	of	property		rights
	(patents, trademarks, etc.) .
3	Compensation received					for
	technical,			managerial,
	engineering, construction, or
	like services
4	Commissions received . .
4	Commissions received . .
5	Rents,	royalties, and			license
	fees received
6	Distributions received . . .
7	Interest received . . . .
8	Other
9	Add lines 1 through 8 . . .
10	Purchases of inventory . .
11	Purchases of tangible property
	other than inventory . . .
12	Purchases of property rights
	(patents, trademarks, etc.) .
13	Compensation			paid		for
	technical,			managerial,
	engineering, construction, or
	like services
14	Commissions paid . . . .
14	Commissions paid . . . .
15	Rents,	royalties, and			license
	fees paid
16	Distributions paid . . . .
17	Interest paid
18	Other
19	Add lines 10 through 18 . .
20	Amounts borrowed (enter the
	maximum		loan		balance
	during the tax year). See
	instructions
21	Amounts		loaned	(enter		the
21	Amounts		loaned	(enter		the
	maximum		loan		balance
	during the tax year). See
	instructions

Form 8865 (2021)

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1. The form 8865 needs specific details to be typed in. Make certain the next blanks are filled out:

2. Once your current task is complete, take the next step – fill out all of these fields - Provide the following information, Name address and identification, Check if the foreign partnership, United States, Form, Form, Form, Service Center where Form is filed, Name and address of foreign, organization if any, Name and address of persons with, During the tax year did the, Were any special allocations made, Enter the number of Forms, and Does the filer have an interest in with their corresponding information. Make sure to double check that everything has been entered correctly before continuing!

People generally make errors while completing Service Center where Form is filed in this part. Don't forget to read twice whatever you enter right here.

3. Your next stage is generally simple - complete every one of the form fields in If Yes does the separate unit or, Does this partnership meet both of, The partnerships total receipts, Yes, Yes, For Privacy Act and Paperwork, Cat No A, and Form to complete the current step.

irs form 8865 completion process clarified (stage 3)

4. Now start working on this next segment! In this case you'll get all these Is the filer of this Form, Yes, b Enter the amount of gross, included in its computation of, c Enter the amount of gross, included in its computation of, d Enter the amount of gross, its computation of FDDEI, Enter the number of foreign, At any time during the tax year, Yes, Sign Here Only if Youre Filing, Paid Preparer Use Only, Under penalties of perjury I, and Signature of general partner or blanks to fill out.

Yes, its computation of FDDEI, and Signature of general partner or of irs form 8865

5. This very last stage to finalize this form is critical. Ensure to fill in the necessary form fields, for instance Constructive Ownership of, Owns a direct interest, Owns a constructive interest, Name, Address, Identification number if any, Check if foreign person, Check if, direct partner, Schedule A Certain Partners of, Name, Address, Identification number if any, Check if foreign person, and Schedule A Foreign Partners of, before submitting. In any other case, it could result in an unfinished and probably nonvalid document!

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