Draft Schedules K-2 and K-3 Released

The Treasury and IRS have released updated early drafts of new Schedules K-2 and K-3 for Forms 1065, 1120-S, and 8865 for tax year 2021 (filing season 2022). The schedules are designed to provide clarity on computing U.S. income tax liability with respect to items of international tax relevance, including claiming deductions and credits.
The redesigned forms give guidance on providing international tax information to partnerships, S corporations and U.S persons who are required to file Form 8865 with respect to controlled foreign partnerships. The changes do not affect partnerships and S corporations with no items of international tax relevance.
IRS also intends to provide penalty relief for the 2021 tax year, in order to promote compliance with adoption of the new schedules by affected pass-through entities, their partners and shareholders. Read more here.