2022 Revised Partnership Instructions for Schedules K-2 and K-3: IRS Expands Eligibility for Domestic Filing Exception

The December draft partnership instructions for the 2022 Schedule K-2 and K-3, released on December 2nd, add two new categories of partnerships that can take advantage of the domestic filing exception introduced in October 2022. To qualify for the domestic filing exception, a partnership must fulfill four requirements detailed in the draft partnership instructions. The December draft of the Revised Partnership Instructions allows S Corporations with only one shareholder and a single-member LLC that is a disregarded entity and whose sole member is one of the following: a U.S. citizen or resident alien, a domestic decedent’s estate with only U.S.-citizen or resident-alien beneficiaries, a domestic grantor trust with only U.S.-citizen or resident-alien grantors and beneficiaries, or a domestic non-grantor trust with only U.S.-citizen resident-alien beneficiaries to use the domestic filing exception.

Seehttps://www.irs.gov/pub/irs-dft/i1065s23–dft.pdf

Posted by Benjamin Sapozhnikov, Associate Editor, Wealth Strategies Journal.

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