This tax basis method requires partnerships to report several elements, including: Partnerships must use this tax basis method to calculate their partner capital accounts.
The altered instructions require partnerships to use the transaction approach when filing this form for the 2020 tax year. The goal of the change is to facilitate greater compliance. The instructions aim to improve the quality of the information that the partnerships report to both the IRS and their partners. The IRS has released these revised instructions as part of a more widespread agency effort to improve compliance. These revised instructions require partnerships to report partners’ tax basis capital account balances on Schedule K-1.įacilitating Increased Compliance by Improving Information Quality They apply to the 2020 tax year (or 2021 filing season). The IRS has released an early draft of instructions for 2020 Form 1065, U.S.