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You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > Form 1065, Sched K1, foreign transactions
Expert: John Kirk, CPA
Date: 9/30/2008
Subject: Form 1065, Sched K1, foreign transactions
Question
Hello,
Could you please tell me the difference between line 16b and line 16c on Form 1065 Sched K? I don't understand what gross income "sourced at the partnership level" means exactly. Also, why is it asked for in the foreign transactions section and not elsewhere in the return?
Thank you very much.
Answer
Line 16b is used to report total gross income for the partnership, both foreign and domestic. Line 16c reports only the amount of gross income derived from a foreign source. See Publication 514 for further information.
The information required relates to the distinction between foreign income sourced at the partner level (e.g. sales & exchanges) and foreign income sourced at the partnership level. Partner's 1116 would need both numbers.
The information is used to fill out Form 1116. You can look at the information required on the 1116 and determine what the 1116 would look like if it was an individual instead of a partnership.
Hope this helps, also if no foreign tax is paid, why bother with line 16.
John Kirk, CPA
www.johnkirkcpa.com
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