U.S. persons may be required to complete and file Form 8621 and/or include amounts in income, with respect to PFICs owned through a partnership. This includes PFICs with respect to which no qualified electing fund (QEF) or mark-to-market (MTM) election has been made and unpedigreed QEFs (section 1291 funds), as well as PFICs with respect to which a pedigreed QEF, MTM, qualifying insurance corporation (QIC), or other election has been, or may be, made. For information regarding the requirement to file Form 8621, as well as certain filing exceptions click here.
Note: If the partnership is a domestic partnership and has made a pedigreed QEF, MTM, or QIC election with respect to a PFIC, the partnership is not required to complete Schedule K-3, Part VII with respect to that PFIC if the partnership files Form 8621 for that PFIC.
To access Part VII of the Schedule K-2 and Schedule K-3, from the main menu of the partnership return (Form 1065) select:
- Schedule K
- Foreign Transactions (K-2)
- Part VII - Select New
Section 1 - General Information on Passive Foreign Investment Company (PFIC), Qualified Electing Fund (QEF), or Qualifying Insurance Corporation (QIC) Columns (a) through (e). If you are required to complete Form 8621 with respect to a PFIC reported on this schedule, use this information to complete the Form 8621 background information.
Partnership Election Codes
QEF | Qualified Electing Fund Election |
MTM | Mark-to-Market Election |
QIC | Qualifying Insurance Corporation Election |
Section 2 - Additional Information on PFIC or QEF
QEF Information - Columns (c) and (d). This information is to assist you in determining your income inclusions from certain PFICs with respect to which you have elected, or may elect, to treat as a QEF.
Mark-to-Market Information - Columns (e) and (f). This information is to assist you in determining your gain or loss from certain PFICs with respect to which you have made, or may make, an MTM election (MTM PFIC).
Section 1291 and Other Information - Generally, this information is to assist you in satisfying any information reporting obligations for, and in figuring income inclusions with respect to, section 1291 funds. However, except as otherwise provided, this information may be relevant to PFICs with respect to which a pedigreed QEF, MTM, or other election has been made by you or the partnership.
Note: This is a guide on entering Schedule K-2 and Schedule K-3 information into TaxSlayer Pro. This is not intended as tax advice.
Additional Information:
IRS: Partnership Instructions for Schedules K-2 and K-3 (Form 1065)