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Schedules K-2 and K-3
I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

Yes. So far it is true.

The IRS has continued to make changes in instructions for these forms. We are adapting the program as new instructions are released.

The only thing that isn't true about what IClub said is that it will add 22 pages per member. It will add more pages but not 22.

Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio
Follow Us on Google+

Click here to Subscribe to the Club Cafe email list. Click here to Unsubscribe


On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:
I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

Len thanks for getting this out !

On Wednesday, February 9, 2022, 02:28:50 PM EST, Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:


I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule  K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

Perhaps it's time we contact our representatives in Congress and describe our displeasure with this proposal.

Charles Bard

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of Laurie Frederiksen
Sent: Wednesday, February 9, 2022 2:37 PM
To: The Club Cafe <club_cafe@bivio.com>
Subject: Re: [club_cafe] Schedules K-2 and K-3

Yes. So far it is true.

The IRS has continued to make changes in instructions for these forms.  We are adapting the program as new instructions are released.

The only thing that isn't true about what IClub said is that it will add 22 pages per member.  It will add more pages but not 22.

Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend!  www.facebook.com/bivio
Follow us on twitter!  www.twitter.com/bivio
Follow Us on Google+

Click here to Subscribe to the Club Cafe email list.  Click here to  Unsubscribe

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:

I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule  K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

That's probably a good idea.

It's not a proposal, it's the current regulations. Like many IRS regulations, there are no thresholds below which reporting would be unnecessary.

Most of us are probably tiny fish being caught in a gigantic net, but we have to follow the rules that are out for partnership returns.

Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio
Follow Us on Google+

Click here to Subscribe to the Club Cafe email list. Click here to Unsubscribe


On Wed, Feb 9, 2022 at 2:59 PM Charles Bard via bivio.com <user*29623800001@bivio.com> wrote:

Perhaps it's time we contact our representatives in Congress and describe our displeasure with this proposal.

Charles Bard

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of Laurie Frederiksen
Sent: Wednesday, February 9, 2022 2:37 PM
To: The Club Cafe <club_cafe@bivio.com>
Subject: Re: [club_cafe] Schedules K-2 and K-3

Yes. So far it is true.

The IRS has continued to make changes in instructions for these forms. We are adapting the program as new instructions are released.

The only thing that isn't true about what IClub said is that it will add 22 pages per member. It will add more pages but not 22.

Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio
Follow Us on Google+

Click here to Subscribe to the Club Cafe email list. Click here to Unsubscribe

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:

I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

Let them choke on their paper.

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:
I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.
The IRS is only doing what Congress directed them to do as part of the 2017 Tax Cuts and Jobs Act. Congress changed the way multinational entities calculate their US tax liability to reduce their ability to eliminate US taxes with excessive foreign tax credits and/or sheltering income offshore. We are just the tiny fish caught in the net.

By all means write to your Representatives in DC and complain. It can be effective. Just this week the IRS announced that it was suspending plans to move to a facial recognition identity verification process if you wanted access to your IRS records.

Ira Smilovitz

On Wed, Feb 9, 2022 at 5:13 PM John Munn via bivio.com <user*223700001@bivio.com> wrote:
Let them choke on their paper.

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:
I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.
Definitely a good idea to write your representatives.

Cecelia

On Feb 9, 2022, at 2:24 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:


The IRS is only doing what Congress directed them to do as part of the 2017 Tax Cuts and Jobs Act. Congress changed the way multinational entities calculate their US tax liability to reduce their ability to eliminate US taxes with excessive foreign tax credits and/or sheltering income offshore. We are just the tiny fish caught in the net. 

By all means write to your Representatives in DC and complain. It can be effective. Just this week the IRS announced that it was suspending plans to move to a facial recognition identity verification process if you wanted access to your IRS records.

Ira Smilovitz

On Wed, Feb 9, 2022 at 5:13 PM John Munn via bivio.com <user*223700001@bivio.com> wrote:
Let them choke on their paper.

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:
I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule  K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

Per IRS instructions for K-2 form: The partnership need not complete this schedule if the partnership does not have items of international tax relevance (typically, international activities or foreign partners). The entire K-2 form is 19 pages long.

Jeri Morgan, Assistant treasurer

Mutual Investment Group of Cheney (WA)

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of cecelia vanderlip via bivio.com
Sent: Wednesday, February 9, 2022 5:26 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

Definitely a good idea to write your representatives.

Cecelia



On Feb 9, 2022, at 2:24 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:



The IRS is only doing what Congress directed them to do as part of the 2017 Tax Cuts and Jobs Act. Congress changed the way multinational entities calculate their US tax liability to reduce their ability to eliminate US taxes with excessive foreign tax credits and/or sheltering income offshore. We are just the tiny fish caught in the net. 

By all means write to your Representatives in DC and complain. It can be effective. Just this week the IRS announced that it was suspending plans to move to a facial recognition identity verification process if you wanted access to your IRS records.

Ira Smilovitz

On Wed, Feb 9, 2022 at 5:13 PM John Munn via bivio.com <user*223700001@bivio.com> wrote:

Let them choke on their paper.

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:

I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule  K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

Jeff,

You haven't seen the revised instructions released on Jan 18. They state that partnerships, even those with no foreign activity, must provide the information unless they know for certain that their partners have no other foreign activity that would require an 1116. Penalties for failure to file are the same as those for errors/omissions on Schedule K-1 - $280 per K-2, increased to the greater of $570 or 10% of the items to be reported per K-2 in the case of intentional disregard.

Ira Smilovitz, EA

On Wed, Feb 9, 2022 at 9:58 PM Jeri Morgan via bivio.com <user*16990000001@bivio.com> wrote:

Per IRS instructions for K-2 form: The partnership need not complete this schedule if the partnership does not have items of international tax relevance (typically, international activities or foreign partners). The entire K-2 form is 19 pages long.

Jeri Morgan, Assistant treasurer

Mutual Investment Group of Cheney (WA)

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of cecelia vanderlip via bivio.com
Sent: Wednesday, February 9, 2022 5:26 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

Definitely a good idea to write your representatives.

Cecelia



On Feb 9, 2022, at 2:24 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:



The IRS is only doing what Congress directed them to do as part of the 2017 Tax Cuts and Jobs Act. Congress changed the way multinational entities calculate their US tax liability to reduce their ability to eliminate US taxes with excessive foreign tax credits and/or sheltering income offshore. We are just the tiny fish caught in the net.

By all means write to your Representatives in DC and complain. It can be effective. Just this week the IRS announced that it was suspending plans to move to a facial recognition identity verification process if you wanted access to your IRS records.

Ira Smilovitz

On Wed, Feb 9, 2022 at 5:13 PM John Munn via bivio.com <user*223700001@bivio.com> wrote:

Let them choke on their paper.

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:

I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

Ira,

Good clarification. The instructions are dated Sept. 2021; the form is dated Feb. 2022. Best course is to provide the detail.

Jeri

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of ira smilovitz via bivio.com
Sent: Wednesday, February 9, 2022 7:56 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

Jeff,

You haven't seen the revised instructions released on Jan 18. They state that partnerships, even those with no foreign activity, must provide the information unless they know for certain that their partners have no other foreign activity that would require an 1116. Penalties for failure to file are the same as those for errors/omissions on Schedule K-1 - $280 per K-2, increased to the greater of $570 or 10% of the items to be reported per K-2 in the case of intentional disregard.

Ira Smilovitz, EA

On Wed, Feb 9, 2022 at 9:58 PM Jeri Morgan via bivio.com <user*16990000001@bivio.com> wrote:

Per IRS instructions for K-2 form:  The partnership need not complete this schedule if the partnership does not have items of international tax relevance (typically, international activities or foreign partners).  The entire K-2 form is 19 pages long.

Jeri Morgan, Assistant treasurer

Mutual Investment Group of Cheney (WA)

 

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of cecelia vanderlip via bivio.com
Sent: Wednesday, February 9, 2022 5:26 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

 

Definitely a good idea to write your representatives.

 

Cecelia

On Feb 9, 2022, at 2:24 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:



The IRS is only doing what Congress directed them to do as part of the 2017 Tax Cuts and Jobs Act. Congress changed the way multinational entities calculate their US tax liability to reduce their ability to eliminate US taxes with excessive foreign tax credits and/or sheltering income offshore. We are just the tiny fish caught in the net. 

 

By all means write to your Representatives in DC and complain. It can be effective. Just this week the IRS announced that it was suspending plans to move to a facial recognition identity verification process if you wanted access to your IRS records.

 

Ira Smilovitz

 

On Wed, Feb 9, 2022 at 5:13 PM John Munn via bivio.com <user*223700001@bivio.com> wrote:

Let them choke on their paper.

 

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:

I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule  K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

Would the recommendation be to sell any ADRs this year to avoid these forms for next year? Too late to do anything about this for 2021 tax return.

On Wed, Feb 9, 2022 at 8:12 PM Jeri Morgan via bivio.com <user*16990000001@bivio.com> wrote:

Ira,

Good clarification. The instructions are dated Sept. 2021; the form is dated Feb. 2022. Best course is to provide the detail.

Jeri

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of ira smilovitz via bivio.com
Sent: Wednesday, February 9, 2022 7:56 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

Jeff,

You haven't seen the revised instructions released on Jan 18. They state that partnerships, even those with no foreign activity, must provide the information unless they know for certain that their partners have no other foreign activity that would require an 1116. Penalties for failure to file are the same as those for errors/omissions on Schedule K-1 - $280 per K-2, increased to the greater of $570 or 10% of the items to be reported per K-2 in the case of intentional disregard.

Ira Smilovitz, EA

On Wed, Feb 9, 2022 at 9:58 PM Jeri Morgan via bivio.com <user*16990000001@bivio.com> wrote:

Per IRS instructions for K-2 form: The partnership need not complete this schedule if the partnership does not have items of international tax relevance (typically, international activities or foreign partners). The entire K-2 form is 19 pages long.

Jeri Morgan, Assistant treasurer

Mutual Investment Group of Cheney (WA)

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of cecelia vanderlip via bivio.com
Sent: Wednesday, February 9, 2022 5:26 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

Definitely a good idea to write your representatives.

Cecelia

On Feb 9, 2022, at 2:24 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:



The IRS is only doing what Congress directed them to do as part of the 2017 Tax Cuts and Jobs Act. Congress changed the way multinational entities calculate their US tax liability to reduce their ability to eliminate US taxes with excessive foreign tax credits and/or sheltering income offshore. We are just the tiny fish caught in the net.

By all means write to your Representatives in DC and complain. It can be effective. Just this week the IRS announced that it was suspending plans to move to a facial recognition identity verification process if you wanted access to your IRS records.

Ira Smilovitz

On Wed, Feb 9, 2022 at 5:13 PM John Munn via bivio.com <user*223700001@bivio.com> wrote:

Let them choke on their paper.

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:

I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

As current IRS instructions stand, you are not going to avoid these forms whether or not you have foreign investments, so that, in itself, would not be a reason to sell them.

However, foreign investments can have the potential to bring other problematic tax reporting and accounting issues for clubs. We've seen many times where such stocks have gone through reorganizations or special distributions and have not provided good guidance on the US tax implications of those things. This has led to delays in providing clubs the information they need to get their records correctly updated.

In addition, if your club owns any ETF's with exposure to foreign companies, you may have more difficulties getting the information you need to report that income on your club taxes with the new forms.

Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio
Follow Us on Google+

Click here to Subscribe to the Club Cafe email list. Click here to Unsubscribe


On Thu, Feb 10, 2022 at 12:04 AM Norman Gee via bivio.com <user*125100001@bivio.com> wrote:
Would the recommendation be to sell any ADRs this year to avoid these forms for next year? Too late to do anything about this for 2021 tax return.

On Wed, Feb 9, 2022 at 8:12 PM Jeri Morgan via bivio.com <user*16990000001@bivio.com> wrote:

Ira,

Good clarification. The instructions are dated Sept. 2021; the form is dated Feb. 2022. Best course is to provide the detail.

Jeri

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of ira smilovitz via bivio.com
Sent: Wednesday, February 9, 2022 7:56 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

Jeff,

You haven't seen the revised instructions released on Jan 18. They state that partnerships, even those with no foreign activity, must provide the information unless they know for certain that their partners have no other foreign activity that would require an 1116. Penalties for failure to file are the same as those for errors/omissions on Schedule K-1 - $280 per K-2, increased to the greater of $570 or 10% of the items to be reported per K-2 in the case of intentional disregard.

Ira Smilovitz, EA

On Wed, Feb 9, 2022 at 9:58 PM Jeri Morgan via bivio.com <user*16990000001@bivio.com> wrote:

Per IRS instructions for K-2 form: The partnership need not complete this schedule if the partnership does not have items of international tax relevance (typically, international activities or foreign partners). The entire K-2 form is 19 pages long.

Jeri Morgan, Assistant treasurer

Mutual Investment Group of Cheney (WA)

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of cecelia vanderlip via bivio.com
Sent: Wednesday, February 9, 2022 5:26 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

Definitely a good idea to write your representatives.

Cecelia

On Feb 9, 2022, at 2:24 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:



The IRS is only doing what Congress directed them to do as part of the 2017 Tax Cuts and Jobs Act. Congress changed the way multinational entities calculate their US tax liability to reduce their ability to eliminate US taxes with excessive foreign tax credits and/or sheltering income offshore. We are just the tiny fish caught in the net.

By all means write to your Representatives in DC and complain. It can be effective. Just this week the IRS announced that it was suspending plans to move to a facial recognition identity verification process if you wanted access to your IRS records.

Ira Smilovitz

On Wed, Feb 9, 2022 at 5:13 PM John Munn via bivio.com <user*223700001@bivio.com> wrote:

Let them choke on their paper.

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:

I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

Don't the brokerages have some degree of responsibility to accurately report those income
items to the clubs and the IRS through the 1099s?

Peter Dunkelberger
Sumner Stock Selectors Investment Club

On Thu, Feb 10, 2022 at 8:54 AM Laurie Frederiksen <laurie@bivio.biz> wrote:

As current IRS instructions stand, you are not going to avoid these forms whether or not you have foreign investments, so that, in itself, would not be a reason to sell them.

However, foreign investments can have the potential to bring other problematic tax reporting and accounting issues for clubs. We've seen many times where such stocks have gone through reorganizations or special distributions and have not provided good guidance on the US tax implications of those things. This has led to delays in providing clubs the information they need to get their records correctly updated.

In addition, if your club owns any ETF's with exposure to foreign companies, you may have more difficulties getting the information you need to report that income on your club taxes with the new forms.

Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio
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On Thu, Feb 10, 2022 at 12:04 AM Norman Gee via bivio.com <user*125100001@bivio.com> wrote:
Would the recommendation be to sell any ADRs this year to avoid these forms for next year? Too late to do anything about this for 2021 tax return.

On Wed, Feb 9, 2022 at 8:12 PM Jeri Morgan via bivio.com <user*16990000001@bivio.com> wrote:

Ira,

Good clarification. The instructions are dated Sept. 2021; the form is dated Feb. 2022. Best course is to provide the detail.

Jeri

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of ira smilovitz via bivio.com
Sent: Wednesday, February 9, 2022 7:56 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

Jeff,

You haven't seen the revised instructions released on Jan 18. They state that partnerships, even those with no foreign activity, must provide the information unless they know for certain that their partners have no other foreign activity that would require an 1116. Penalties for failure to file are the same as those for errors/omissions on Schedule K-1 - $280 per K-2, increased to the greater of $570 or 10% of the items to be reported per K-2 in the case of intentional disregard.

Ira Smilovitz, EA

On Wed, Feb 9, 2022 at 9:58 PM Jeri Morgan via bivio.com <user*16990000001@bivio.com> wrote:

Per IRS instructions for K-2 form: The partnership need not complete this schedule if the partnership does not have items of international tax relevance (typically, international activities or foreign partners). The entire K-2 form is 19 pages long.

Jeri Morgan, Assistant treasurer

Mutual Investment Group of Cheney (WA)

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of cecelia vanderlip via bivio.com
Sent: Wednesday, February 9, 2022 5:26 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

Definitely a good idea to write your representatives.

Cecelia

On Feb 9, 2022, at 2:24 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:



The IRS is only doing what Congress directed them to do as part of the 2017 Tax Cuts and Jobs Act. Congress changed the way multinational entities calculate their US tax liability to reduce their ability to eliminate US taxes with excessive foreign tax credits and/or sheltering income offshore. We are just the tiny fish caught in the net.

By all means write to your Representatives in DC and complain. It can be effective. Just this week the IRS announced that it was suspending plans to move to a facial recognition identity verification process if you wanted access to your IRS records.

Ira Smilovitz

On Wed, Feb 9, 2022 at 5:13 PM John Munn via bivio.com <user*223700001@bivio.com> wrote:

Let them choke on their paper.

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:

I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.

Does a club with less than 10 members have to file these forms?

On 2/10/2022 8:15 AM, Peter Dunkelberger via bivio.com wrote:
Don't the brokerages have some degree of responsibility to accurately report those income
items to the clubs and the IRS through the 1099s?

Peter Dunkelberger
Sumner Stock Selectors Investment Club

On Thu, Feb 10, 2022 at 8:54 AM Laurie Frederiksen <laurie@bivio.biz> wrote:

As current IRS instructions stand, you are not going to avoid these forms whether or not you have foreign investments, so that, in itself, would not be a reason to sell them.

However, foreign investments can have the potential to bring other problematic tax reporting and accounting issues for clubs. We've seen many times where such stocks have gone through reorganizations or special distributions and have not provided good guidance on the US tax implications of those things. This has led to delays in providing clubs the information they need to get their records correctly updated.

In addition, if your club owns any ETF's with exposure to foreign companies, you may have more difficulties getting the information you need to report that income on your club taxes with the new forms.

Laurie Frederiksen
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On Thu, Feb 10, 2022 at 12:04 AM Norman Gee via bivio.com <user*125100001@bivio.com> wrote:
Would the recommendation be to sell any ADRs this year to avoid these forms for next year? Too late to do anything about this for 2021 tax return.

On Wed, Feb 9, 2022 at 8:12 PM Jeri Morgan via bivio.com <user*16990000001@bivio.com> wrote:

Ira,

Good clarification. The instructions are dated Sept. 2021; the form is dated Feb. 2022. Best course is to provide the detail.

Jeri

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of ira smilovitz via bivio.com
Sent: Wednesday, February 9, 2022 7:56 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

Jeff,

You haven't seen the revised instructions released on Jan 18. They state that partnerships, even those with no foreign activity, must provide the information unless they know for certain that their partners have no other foreign activity that would require an 1116. Penalties for failure to file are the same as those for errors/omissions on Schedule K-1 - $280 per K-2, increased to the greater of $570 or 10% of the items to be reported per K-2 in the case of intentional disregard.

Ira Smilovitz, EA

On Wed, Feb 9, 2022 at 9:58 PM Jeri Morgan via bivio.com <user*16990000001@bivio.com> wrote:

Per IRS instructions for K-2 form: The partnership need not complete this schedule if the partnership does not have items of international tax relevance (typically, international activities or foreign partners). The entire K-2 form is 19 pages long.

Jeri Morgan, Assistant treasurer

Mutual Investment Group of Cheney (WA)

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of cecelia vanderlip via bivio.com
Sent: Wednesday, February 9, 2022 5:26 PM
To: club_cafe@bivio.com
Subject: Re: [club_cafe] Schedules K-2 and K-3

Definitely a good idea to write your representatives.

Cecelia

On Feb 9, 2022, at 2:24 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:



The IRS is only doing what Congress directed them to do as part of the 2017 Tax Cuts and Jobs Act. Congress changed the way multinational entities calculate their US tax liability to reduce their ability to eliminate US taxes with excessive foreign tax credits and/or sheltering income offshore. We are just the tiny fish caught in the net.

By all means write to your Representatives in DC and complain. It can be effective. Just this week the IRS announced that it was suspending plans to move to a facial recognition identity verification process if you wanted access to your IRS records.

Ira Smilovitz

On Wed, Feb 9, 2022 at 5:13 PM John Munn via bivio.com <user*223700001@bivio.com> wrote:

Let them choke on their paper.

On Wed, Feb 9, 2022 at 2:28 PM Leonard J Delmolino via bivio.com <user*27879700001@bivio.com> wrote:

I just saw the following posted on the Better Investing
Treasurer's discussion list. Is this true?

The IRS published new draft instructions for schedule K-2
dated
1/31/2022 on their draft forms web page. The new
instructions will
require ALL clubs to include a schedule K-2 and K-3s for
each member
with their form 1065, even if the club had no foreign
income.
ICLUBcentral is making the needed changes to the Federal tax
printer so
these schedules will be included for all clubs. Please
consider waiting
until these changes are implemented to generate your club
Federal tax
return. These schedules are LONG and will add about 220
pages to the
return of a club with 10 members. E-filing becomes an even
better option
now.