The Internal Revenue Service has released draft revisions of the Corporate 1120 and Partnership 1065 tax forms, along with related schedules, for public comment.
The revisions include a new Schedule B for Form 1120 and Schedule C for Form 1065 for tax years ending on or after Dec. 31, 2008. "The draft revisions and new forms will increase transparency about the ownership and relationships between entities that make up complex enterprise business structures," said IRS Large and Mid-Size Business Division Commissioner Frank Y. Ng in a statement.
The major change to Form 1120 is to Schedule K and involves reporting direct and indirect ownership. When ownership meets certain percentage thresholds, it must be reported on Schedule K. The new Schedule B is required of corporations that file Form 1120 Schedule M-3 and will provide information about allocations, transfers of interest, cost-sharing arrangements and changes in methods of accounting.
The major changes to the Form 1065 also involve ownership issues. When ownership meets certain percentage thresholds, it must be reported on Schedule B. The new Schedule C will be required of Form 1065 filers that file Schedule M-3.
New instructions for Item J of Schedule K-1 (Form 1065) clarify how partnerships determine partners' percentage share in the profit, loss and capital at the beginning and end of the partnership's tax year.
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