IRS Makes Good on Exception for Partnership Foreign Income (1)

The IRS issued draft instructions Wednesday on new forms for disclosure of partnerships’ foreign income that give some strictly domestic partnerships a break on the much-protested new requirements.

The draft instructions on Schedules K-2 and K-3 provide for a “domestic filing exception” under which partnerships without any foreign activity or foreign partners are exempt from filing the schedules for the current tax year. The IRS had promised such an exemption in February.

Schedules K-2 and K-3 are intended to provide more detail on partnerships’ foreign income that is currently reported on Schedule K-1. The IRS had initially planned to ...