{"id":20673,"date":"2023-09-06T16:38:12","date_gmt":"2023-09-06T16:38:12","guid":{"rendered":"https:\/\/www.thinkadvisor.com\/2023\/09\/06\/irs-clears-up-a-confusing-business-tax-reporting-question\/"},"modified":"2023-09-06T16:38:12","modified_gmt":"2023-09-06T16:38:12","slug":"irs-clears-up-a-confusing-business-tax-reporting-question","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2023\/09\/06\/irs-clears-up-a-confusing-business-tax-reporting-question\/","title":{"rendered":"IRS Clears Up a Confusing Business Tax Reporting Question"},"content":{"rendered":"<div class=\"media_block\"><a href=\"https:\/\/feeds.feedblitz.com\/-\/792549365\/0\/thinkadvisor\/\"><img decoding=\"async\" src=\"https:\/\/images.thinkadvisor.com\/contrib\/content\/uploads\/sites\/415\/2022\/10\/IRS_Building_Sign_BB_640x640.jpg\" class=\"media_thumbnail\"><\/a><\/div>\n<div><img decoding=\"async\" src=\"https:\/\/images.thinkadvisor.com\/contrib\/content\/uploads\/sites\/415\/2022\/10\/IRS_Building_Sign_BB_640x640.jpg\" class=\"ff-og-image-inserted\"><\/div>\n<div class=\"the-advisor bullet-summary\">\n<h3>What You Need to Know<\/h3>\n<ul>\n<li>The IRS has published new guidance about reporting losses on a tax form used to disclose pass-through entity profits. <\/li>\n<li>Schedules K-2 and K-3, used to report items of international tax relevance, do not allow reporting of negative amounts.<\/li>\n<li>Taxpayers should write a zero on the form and attach additional info, the IRS says.<\/li>\n<\/ul>\n<\/div>\n<p id=\"first-para\">The Internal Revenue Service has published <a href=\"https:\/\/www.irs.gov\/newsroom\/irs-issues-a-frequently-asked-question-for-pass-through-entities-to-report-negative-amounts-to-the-irs-on-part-ii-of-schedules-k-2-and-k-3\">Fact Sheet 2023-20<\/a>, an FAQ-style document meant to provide guidance to pass-through entities for electronically filing Schedules K-2 and K-3 to the IRS to report negative amounts.<\/p>\n<p>As noted in the fact sheet, the 2022 tax year schema for Schedule K-2 and K-3 do not permit negative values. The FAQ provides guidance to pass-through entities about how to report losses.<\/p>\n<p>As detailed on the <a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/i1065s23.pdf\" target=\"_blank\" rel=\"noopener\">IRS website<\/a>, Schedule K-2 is an extension of Form 1120-S, known as Schedule K, and is used to report items of international tax relevance from the operation of an S corporation. Schedule K-3 is an extension of Schedule K-1 and is generally used to report to shareholders their share of the items reported on Schedule K-2.<\/p>\n<p>The question posed in the document goes as follows: \u201cFor the 2022 tax year, a pass-through entity receives information (for example, a Schedule K-3 from a lower-tier pass-through entity) that certain gross income amounts to be reported on the Schedules K-2 and K-3 are negative.<\/p>\n<p>\u201cHowever, the current schema for electronic filing of the Schedules K-2 and K-3 does not permit negative values for certain line items in Part II, Section 1 of Schedules K-2 and K-3. How should these negative amounts be reported on Schedules K-2 and K-3 to the IRS and to the partners or members?\u201d<\/p>\n<p>According to the new fact sheet, a pass-through entity electronically filing the Schedules K-2 and K-3 for the 2022 tax year should enter zero on the line items in Schedules K-2 and K-3, Part II, Section 1 for which the schema does not permit negative values.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What You Need to Know The IRS has published new guidance about reporting losses on a tax form used to disclose pass-through entity profits. Schedules K-2 and K-3, used to report items of international&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":20674,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[1],"jetpack_featured_media_url":"https:\/\/blog.lifeinsurance-orleans.ca\/wp-content\/uploads\/2023\/09\/irs-clears-up-a-confusing-business-tax-reporting-question.jpg","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/20673"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=20673"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/20673\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media\/20674"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=20673"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=20673"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=20673"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}