טופס 8978 הוראות כולל לוח זמנים
הוראות טופס 8978 (כולל לוח זמנים A), Partners דוחות נוספים על מס השנה (לשימוש עם טופס 8978 (Dec. 2019) ולוח זמנים A (Form 8978)
ינואר 2024
טפסים קשורים
- טופס 8978 - השותפים הנוספים דיווח על מס השנה
- טופס 8978 לוח זמנים - השותפים הנוספים דיווח על מס השנה (Schedule of Adjustments)
Department of the Treasury
Internal Revenue Service
Instructions for Form 8978
(Including Schedule A)
(Rev. January 2024)
Partner’s Additional Reporting Year Tax
For use with Form 8978 (Rev. Jan. 2023)
Note: An entity such as a trust or an estate can be both a
taxable partner and pass-through partner. For adjustments to
items that are taxable to the entity partner, it should use Form
8978; and for adjustments to items that pass through to the
partner's owners or beneficiaries, it should follow the Forms
8985 and 8986 instructions for pass-through partners.
Contents
Page
The Schedule A (Form 8978) lists all the adjustments a
partner receives on Form 8986. Schedule A is also used to
report any related amounts and adjustments not reported on
Form 8986 which may result from changes to partner-level tax
attributes as a result of adjustments from Form 8986.
Form 8978 should only be used for changes to a partner’s
income tax. Any non-income tax changes that are related to the
income tax adjustments on Form 8986 received by the partner,
such as self-employment tax changes, should be reflected on an
amended return for the partner’s first affected year. The
amended return should include a statement that explains how
the change to non-income tax was calculated, and the source of
information.
Section references are to the Internal Revenue Code unless
otherwise noted.
Future Developments
For the latest information about developments related to Form
8978 and its instructions, such as legislation enacted after they
Non-pass-through partners reporting credit amounts on
Form 8978. Partners other than pass-through partners (such as
partnerships or S corporations) use Form 8978 and Schedule A
(Form 8978) to calculate the tax in their reporting year from
adjustments shown on Forms 8986 (pushout statement)
originating from a BBA partnership because of a BBA
examination or a BBA partnership AAR filing. The partner's
reporting year is the partner's tax year that includes the date the
audited BBA partnership or BBA partnership that filed an AAR
furnished the Forms 8986 to its partners.
These partners do not report on Form 3800 any changes to
credits reported on the pushout statement. Instead, Form 8978
is used to calculate the change in tax for the first affected year
and any intervening years of the partner that result from the
adjustments included on the pushout statement (including
adjustments to credits). The first affected year is the partner's tax
year that includes the end of the audited partnership's reviewed
year or the year for which the AAR was filed. The intervening
years are the partner's tax years that end after the first affected
year and before the reporting year. The total change of tax for
these years is then reported on Form 8978 as an increase/
decrease to the reporting year tax.
Because the total tax change is reported on Form 8978,
which is then used to change the reporting year tax, a refund
claim is not made by the partner and the adjustments to credits
reported on Form 8978 should not be duplicated on Form 3800.
See Exception below pertaining to “Form 3800 for Form 8978
Calculation Only,” which will not duplicate reported credits but
only support the calculation contained on the Form 8978.
However, any carryforward credit amounts after the first affected
year and any intervening years are reported on Form 3800 for
the reporting year and reported as carryforwards (if appropriate)
on Form 3800 in years after the reporting year.
What’s New
In general, adjustments from multiple Forms 8986 received from
partnerships can be reported by a partner on one Schedule A
(Form 8978) as long as the adjustments are from the same
source type. Totals from the Schedule A are carried by the
partner to Form 8978. However, adjustments from Forms 8986
related to administrative adjustment requests (AARs) must be
separated from adjustments from audits under the centralized
partnership audit regime of the Bipartisan Budget Act of 2015
(BBA). For this reason, check boxes have been added to Form
8978 and its Schedule A to indicate the source of the
adjustment(s) being reported: AAR filing or BBA audit.
If a partner has adjustments from more than one source (AAR
filing or BBA audit), each source type must be reported on a
separate Form 8978 and Schedule A. The partner indicates the
source of adjustment using the check boxes. Schedule A
adjustments related to an AAR filing are carried to a Form 8978
with the “AAR Filing” box checked. Schedule A adjustments
related to a BBA audit are carried to a Form 8978 with the “BBA
Audit” box checked.
Because each Form 8978 and its Schedule A only provide for
4 years of reporting, if there are more than 4 years of
adjustments for either source, the partner must file multiple
Forms 8978 and Schedules A relating to that source. Schedule A
adjustments related to a BBA audit are carried to a Form 8978
with the “BBA Audit” box checked. See Reporting adjustments
Purpose of This Form
Partners (other than pass-through partners such as partnerships
or S corporations) use Form 8978 and Schedule A (Form 8978)
to report adjustments shown on Forms 8986 received from
partnerships that have elected to push out adjustments to
partnership-related items to their partners.
Jan 9, 2024
Cat. No. 69657Z
Exception: In preparing Form 8978, the partner may
attach Forms 3800 to support the applicable first
affected year or intervening year(s) calculations by
General Instructions
Who Must File
Every partner (except pass-through partners) that receives a
Form 8986 from a pass-through entity must file Form 8978 to
report any additional reporting year tax as a result of taking into
account the partner’s share of the reviewed year(s) adjustments.
TIP
labeling each Form 3800 attachment in each header with: “Form
3800 for Form 8978 Calculation Only.”
Definitions
AAR partnership is a BBA partnership (see below) which has
filed an administrative adjustment request (AAR) under section
6227.
Where and When To File
A reviewed year partner or affected partner must file Form 8978
Additional reporting year tax is the partner’s change in
chapter 1 tax for the reporting year after taking into account the
adjustments.
with a federal income tax return for the partner’s reporting year.
Example 1. Where and when to file. On March 1, 2023, an
audited partnership furnishes Forms 8986 to its two partners.
One of these reviewed year partners is a calendar year individual
and the other is a pass-through partner. On January 15, 2024,
the pass-through partner, in turn, furnishes Forms 8986 to its two
partners who are calendar year individuals. The reporting year
for all three individuals is the tax year that includes March 1,
2023. Because the partners all have a calendar year end, the
reporting year is the 2023 tax year. The partners must each
attach a completed Form 8978 to their individual income tax
returns which are due April 15, 2024 (without regard to
extensions).
Affected partner is a partner that held an interest in a
pass-through partner at any time during the tax year of the
pass-through partner to which the adjustments in the statement
relate.
Applicable tax year is any tax year that is impacted by the audit
adjustments shown on Form 8986. For example, if the
adjustments are from tax year 2020 (first affected year), that year
would be impacted as well as any year between the first affected
year and the reporting year that had related changes to
partner-level tax attributes.
Audited partnership, for purposes of Form 8978, is a BBA
partnership that made the election under section 6226 to have its
partners take into account their share of adjustments for
partnership-related items.
Completing Form 8978 and Schedule A
What to report on Form 8978 and Schedule A (Form 8978).
The specific adjustments listed on Form 8986 received by a
reviewed year or affected partner, and other adjustments from
partner-level tax attributes that have changed as a result of
taking into account the adjustments, should be listed on the
partner’s Schedule A under lines 1, 3, and 5 for income,
deductions, and credits, respectively, for the applicable tax year.
The totals on lines 2, 4, and 6 of Schedule A are reported on
lines 1b, 3b, and 9b, respectively, of Form 8978.
BBA AAR is an administrative adjustment request filed by a BBA
partnership.
BBA partnership is a partnership that is subject to the
centralized partnership audit regime that was enacted into law by
section 1101 of the Bipartisan Budget Act of 2015 (BBA).
First affected year is the partner’s tax year that includes the
end of the audited partnership’s reviewed year(s). Each reviewed
year of an audited partnership should have a corresponding first
affected year for each partner.
Intervening years include the partner’s tax years that end after
the first affected year and before the reporting year.
Non-pass-through partner is a partner that is other than a
pass-through partner.
Note. Tax attribute schedules should be adjusted to the extent
adjustments to non-income items were received. For example, if
the partner’s Form 8986 reflected a decrease to the partner’s
share of recourse liabilities, this could change the partner’s
amount at risk, which in turn could result in an adjustment on
Schedule A to reduce the allowable loss from the partnership. In
this example the partner's at risk schedule should be adjusted
and an increase to income should be reported on Schedule A to
reflect the decrease to the previously reported loss from the
partnership.
Pass-through partner is a pass-through entity that holds an
interest, either directly or indirectly, in a partnership.
Pass-through entities include partnerships required to file a
return under section 6031(a), S corporations, trusts (other than
wholly owned trusts disregarded as separate from their owners
for federal tax purposes), and decedents’ estates. For this
purpose, a pass-through entity is not a wholly owned entity
disregarded as separate from its owner for federal tax purposes.
Tax calculations. Taxes should be figured and shown on a
separate statement. In general, non-pass-through partners that
receive adjustments from a Form 8986 should figure the
additional reporting year tax as if all the adjustments on Form
8986 had been included on the partner’s first affected year return
using a statement attached to Form 8978 to support the amounts
reported on lines 6 and 7 of the Form 8978. The additional
reporting year tax from line 14 is then reported on the partner’s
reporting year income tax return.
Note: An entity partner can be both a non-pass-through partner
and pass-through partner. To the extent the adjustments an
entity partner receives on a Form 8986 relate to items that are
taxable at the entity level, it is considered a non-pass-through
partner and with regard to adjustments that pass through to its
owners/beneficiaries it is considered a pass-through partner.
Reporting year is the partner’s tax year(s) that includes the
date the audited or AAR partnership furnished the Forms 8986 to
its partners. The date the audited partnership or BBA
partnership that filed an AAR furnished Forms 8986 to its
partners is found on Form 8986, Part II, item G. For example, if
the Form 8986, Part II, item G, date is 06/15/2023 and the
partner receiving the Form 8986 is a calendar-year-end partner,
that partner’s reporting year is tax year ending 12/31/2023.
Reviewed year is the audited or AAR partnership’s tax year to
which the partnership adjustment(s) relates.
Columns (a) through (d). Columns (a) through (d) on Form
8978 and Schedule A can be used for adjustments for the first
affected year or intervening years. See Receipt of multiple Forms
8986, later.
Years to include and exclude on Form 8978 and Sched-
to be shown on Form 8978 and Schedule A. A year that is not
impacted does not have to be shown on the form or schedule.
For example, if the first affected year is 2020 and the reporting
year is 2025, years 2021–2024 are considered intervening years.
If the only intervening year impacted is 2023 (that is, 2023 is the
only intervening year that had related changes to partner-level
Reviewed year partner is any person that held an interest in
the audited or AAR partnership at any time during the
partnership’s reviewed year.
2
Instructions for Form 8978 (Jan. 2024)
tax attributes as a result of the 2020 adjustments), the form and
schedule only need to show 2020 and 2023.
the $5,000 that he has determined is available for offset as a
negative amount on line 1c.
Bill carries the totals from lines 2 and 4 of Schedule A to Form
8978, lines 1b and 3b, respectively. Bill also completes lines 1a,
2, 3a, and 4 on the Form 8978, according to the instructions.
Receipt of multiple Forms 8986. If a partner receives multiple
Forms 8986 for different years, a column on the form and
schedule could be both an affected year and an intervening year.
Bill attaches to Form 8978 a statement that shows how his tax
year 2021 corrected taxable income, income tax, and AMT, if
applicable, were figured. He includes the income adjustment as
an increase to income and the deduction adjustment as a
decrease to deductions.
Bill carries the amounts figured in the statement to lines 5, 6,
and 8 of Form 8978. He enters his corrected tax liability for tax
year 2021 on line 11 of Form 8978. He enters his income tax as
previously reported for tax year 2021 on line 12 of Form 8978
and subtracts this amount from the amount on line 11 to obtain
the increase or decrease to tax, which he enters on line 13.
If any applicable penalties are shown on Form 8986, Part V,
Bill must attach a statement to his Form 8978 that shows how the
additional penalties that result from the additional tax were
figured. If penalties are applicable, Bill needs to include this
amount on line 15 of Form 8978. Because Part V of the Form
8986 Bill received indicates that the section 6662 substantial
understatement penalty applies, Bill prepares a separate
calculation which shows that the additional $3,408 in tax
reported on line 13, column (a), of the Form 8978 does not
exceed the $5,000 threshold required for the penalty to apply. He
attaches this separate penalty calculation statement to his return
and enters zero on line 15 of his Form 8978.
Bill figures his additional interest on the increase in tax shown
on line 14 of his Form 8978 from April 15, 2022 (the due date of
his 2021 return), up to the date the additional reporting year tax
is paid. If penalties had been shown on his Form 8978, Bill would
have figured interest on penalties from the due date of his 2021
return, or the extended due date of his 2021 return, if a valid
extension request had been filed.
Note. If all of the adjustments from Forms 8986 cannot fit on
one Schedule A (Form 8986), multiple Schedules A can be
attached. If more than one Schedule A is needed, enter the
totals from all Schedule A lines 2, 4, and 6 on the corresponding
Form 8978 lines 1b, 3b, and 9b, respectively.
Reporting adjustments related to an AAR. Adjustments from
an AAR are reported separately from adjustments from a BBA
audit on Forms 8978 and Schedules A. A checkmark in box 1 or
2 of Part I, item A of Form 8986 indicates the adjustments are
related to an audit of a BBA partnership. A checkmark in box 3 or
4 of Part I, item A of Form 8986 indicates the adjustments are
related to an AAR. If a partner has no adjustments from a Form
8986 that are related to an audit, but only adjustments related to
an AAR, only the AAR-related Form 8978 and Schedule A need
to be included.
If one or more adjustments are from a Form 8986 that is
related to an AAR, a separate Form 8978 and Schedule A (Form
8978) must be completed to report the tax impact of these
adjustments and calculate the correct interest. The Form 8978
and its Schedule A should be filled out in the same way as for an
audit-related Form 8978 and its Schedule A. Select the “AAR
Filing” checkbox at the top of the Form 8978 and the Schedule A
and enter the employer identification number of the entity that
issued the Form 8986.
Note. If all adjustments are AAR-related, only one Form 8978
and one Schedule A need to be completed.
Reporting adjustments related to a BBA audit. The following
example shows how adjustments reported on Form 8986 related
to a BBA audit are reported on Form 8978 and its Schedule A.
Note. The reduction in tax for 2022 reflected in column (b) of the
Form 8978 is included in the total increase to tax reported on
line 14, but is not included in the interest calculation.
If there were any intervening year partner-level adjustments,
Bill would have done similar calculations for those years. For
example, if any of the adjustments made for 2021 or 2022 would
also apply to Bill’s 2023 tax year, Bill would complete column (c)
for 2023 on Schedule A (Form 8978) and column (c) for 2023 on
Form 8978, showing the partner-level adjustments.
Bill must report the additional reporting year tax from line 14
of Form 8978 on the appropriate line on his 2023 Form 1040,
following the Instructions for Form 1040.
Bill’s payment accompanying his 2023 Form 1040 should
include the tax and interest. If a penalty had been applicable, he
would include that in his payment as well.
Example 2. Completing Form 8978 and Schedule A for
an audit-related Form 8986. On June 10, 2023, Bill Jones,
who files as a single individual, calendar-year taxpayer, receives
a Form 8986 from an audited partnership of which Bill is a
partner. The Form 8986 is for reviewed year 2021. Part II, box G,
of the Form 8986 indicates that the audited partnership issued
Forms 8986 to its partners on June 8, 2023. Because June 8,
2023, is within Bill’s tax year ending December 31, 2023, Bill
must report these adjustments on his 2023 Form 1040 income
tax return and attach Form 8978.
The Form 8986 indicates that Bill's share of the adjustments
includes a $15,000 increase to ordinary income and a $10,000
decrease in other deductions, in Part V of Form 8986, and a
$6,000 decrease to capital gains, shown as a negative amount in
Part V of Form 8986.
Bill determines that the adjustments shown on Form 8986 are
from a partnership that he treats as a section 469 passive activity
for tax purposes.
Bill previously reported no capital gains or losses on his
Forms 1040 in 2021 and 2022, and now has a $6,000 decrease
to capital gains (increased capital loss). Due to the $3,000
annual capital loss limitation, the $6,000 capital loss adjustment
is taken in $3,000 annual increments. So, Bill claims a $3,000
capital loss in 2021 and the remaining $3,000 capital loss in
2022.
Bill enters the ordinary income, the capital gain/loss
adjustments, and the appropriate tracking numbers on
Schedule A (Form 8978), lines 1a and 1b, respectively. After
taking into account the BBA income adjustment for 2021, 2022,
and 2023, Bill determines that there are $5,000 in previously
suspended passive activity losses that can be used. He enters
Bill must attach Form 8978, Schedule A (Form 8978), and the
calculation statements to the Form 1040 he files for 2023. In this
example, Bill should include statements for tax and penalty
calculations related to Form 8978. He should also attach his
section 469 suspended loss and section 199A schedules; these
should include the adjustments shown on his Schedule A (Form
8978).
If a corporation received a Form 8986 identical to the one that
Bill received, the corporation would follow the same procedures
for completing Form 8978 and Schedule A, and include those
with its tax year 2023 income tax return. The additional tax,
penalties, and interest would be reported and paid following the
instructions for the corporation’s income tax return.
Reporting adjustments from both an audit and from an
AAR. If a partner receives one or more audit-related Forms
3
Instructions for Form 8978 (Jan. 2024)
8986 and also one or more AAR-related Forms 8986, the
partner’s Form 8978 related to the AAR adjustments should be
completed first. The numbers shown on this first Form 8978
should be included in the “as previously reported” numbers on
the Form 8978 related to the audit adjustments. Each Form 8978
should have applicable lines completed, and the partner should
add all the amounts on line 14 (total increase/decrease to tax)
from all the Forms 8978 and report the sum on the appropriate
line of the tax return.
Example 3. Completing Forms 8978 and Schedules A for
an audit-related Form 8986 and an AAR-related Form 8986.
Frank Smith files as a single individual. On May 15, 2021, Frank
received a Form 8986 related to an AAR that was filed by a
partnership in which he is a partner. This Form 8986 reflects an
increase of $5,000 to Frank’s share of other deductions. On June
12, 2021, he received a Form 8986 related to an audit, showing
an additional $10,000 in income. No penalties were noted on
either Form 8986. According to the date shown on Parts II, item
D of the Forms 8986, both relate to adjustments made to the
2020 tax year.
Frank’s first step is to complete a Form 8978 and Schedule A
(Form 8978) for the AAR-related adjustments. He calculates a
decrease in tax of $1,200 from the AAR- related adjustments
and reports that amount on line 14 of the AAR-related Form
8978.
Frank’s second step is to complete another Form 8978 and
Schedule A (Form 8978) for the audit-related adjustments. On
this second Form 8978 (the audit-related Form 8978), he
includes the amounts from the AAR-related Form 8978 in the
“previously reported” amounts on lines 1a, 3a, 9a, and 12. He
figures a total increase to tax of $2,400 from the audit-related
adjustments and reports this on line 14 of the audit-related Form
8978. He reports the total net amount of $1,200 on the
appropriate line of his Form 1040, referring to the Instructions for
Form 1040.
Frank attaches the forms to his 2022 Form 1040 and includes
payment of the additional $1,200 in tax, following the Instructions
for Form 1040 with regard to amounts from Form 8978. The
amount of interest is figured on the audit-related increase to tax
on line 13 of the audit-related Form 8978 using the short-term
quarterly rate plus 5%; interest runs from the due date of Frank’s
2020 Form 1040 to the date of payment. This amount is reported
on lines 17 and 18 of the audit-related Form 8978.
Because the AAR-related Form 8978 showed a decrease to
tax, no interest is shown on that Form 8978. If the AAR-related
Form 8978 had an increase to tax, the interest would be figured
using the same dates as for the audit-related Form 8978, but the
rate would be the short-term quarterly rate plus 3%, and the
amount would have been reported on line 17 of the AAR-related
Form 8978.
and its Schedule A should only include ECI figures, and each
“FDAP Form 8978” and its Schedule A should only include FDAP
figures.
Note. Attach a statement to each “ECI Form 8978” and each
“FDAP Form 8978” explaining how all line 13 income tax
numbers were calculated. Enter the total of all the line 13
amounts on line 14. Enter the amounts from line 14 on the
applicable lines on the partner’s reporting year income tax
return. See the instructions for the applicable income tax return.
You may receive a Form 1042-S or 8805 from the partnership (or
a pass-through partner) that has withheld on your additional
reporting year tax, and you may claim the withholding credit on
your income tax return.
Specific Instructions for Form 8978
Part I—Computation of Additional Reporting
Year Tax
Each column, (a) through (d), is figured separately for lines 1
through 13.
Line 1a—Total income per original return or as
previously adjusted. Enter the total income amount as shown
on your original or amended return, or as adjusted by the IRS.
Enter negative amounts in parentheses.
Line1b—Adjustments to income. Enter the amount from
Schedule A, line 2, Total adjustments to income.
Line 2—Corrected income. Enter the total of lines 1a and
1b.
Line 3a—Total deductions per return or as previously
adjusted. Enter the total amount of deductions shown on your
original or amended return, or as adjusted by the IRS.
Line 3b—Adjustments to deductions. Enter the amount
from Schedule A, line 4, Total adjustments to deductions.
Line 4—Corrected deductions. Combine the amount on
line 3b with the amount on line 3a and enter the result.
Line 5—Corrected taxable income. Subtract line 4 from
line 2 and enter the result. This should be the corrected taxable
income. If, as a result of changes in tax attributes, corrected
taxable income is different from the result obtained by
subtracting line 4 from line 2, include a separate statement
showing how the corrected taxable income amount was figured
and enter that corrected amount on line 5.
Line 6—Income tax. Include a separate statement showing
how the corrected income tax was figured and enter that
corrected income tax on line 6. See the Instructions for Form
1040 or the instructions for your income tax return for the
appropriate year(s).
Line 7—Alternative minimum tax (AMT). If AMT applies,
include a separate statement showing how the corrected AMT,
including the applicable adjustment(s) shown on Schedule A,
was figured and enter the corrected AMT on line 7. See the
Instructions for Form 1040 or the instructions for your income tax
return for the appropriate year(s) to figure the corrected AMT.
Line 8—Total corrected income tax. Enter the sum of lines
6 and 7.
Line 9a—Total credits per return or as previously
adjusted. Enter the total amount of credits shown on your
original or amended return, or as adjusted by the IRS.
Line 9b—Adjustments to credits. Enter the amount from
Schedule A, line 6, Total adjustments to credits.
Line 10—Total corrected credits. Combine the amounts on
lines 9a and 9b and enter the result on line 10.
Line 11—Total corrected income tax liability. Subtract
line 10 from line 8 to obtain the corrected income tax liability.
This amount should not include any non-income taxes. If, as a
result of changes not reflected on a line item on the form or
schedule, corrected income tax liability after credits is different
More than 4 applicable tax years. If there are more than 4
8978 should be prepared for the additional years. Each Form
8978 should have all lines completed and the total of all the
line 14 amounts should be reported on the appropriate line of the
partner’s return. Include a Schedule A for each Form 8978.
Foreign partners that receive Forms 8986. Foreign corporate
partners that receive Forms 8986 must complete separate
Forms 8978 and Schedules A (Form 8978) to report adjustments
pertaining to effectively connected income (ECI) under section
882, and fixed, determinable, annual, periodical (FDAP) income
under section 881. ECI is income effectively connected with the
conduct of a trade or business in the United States; FDAP
income is income from U.S. sources not effectively connected
with the conduct of a trade or business in the United States. The
Forms 8978 and related Schedules A should clearly indicate
whether they reflect ECI or FDAP income. Each “ECI Form 8978”
4
Instructions for Form 8978 (Jan. 2024)
from the result obtained by subtracting line 10 from line 8,
include a separate statement showing how the corrected liability
was figured and enter that correct amount on line 11.
Line 12—Total tax shown on return or as previously
adjusted. Enter the amount shown on your original or
amended return, or as adjusted by the IRS.
the Form 8986. If the tracking number is not on the Form 8986,
use the audit control number at the top of the Form 8986, and if
the audit control number is also blank, enter the tax identification
number of the entity that issued the Form 8986. Leave the
tracking number field blank for all adjustments to partner-level
tax attributes.
Line 13—Increase/decrease to tax. Subtract the amount
shown on line 12 from the amount on line 11 and enter the result.
Line 14—Total additional reporting year tax. Enter the
sum of line 13, columns (a) through (d). Report this amount on
the appropriate line of your income tax return for the reporting
year.
Reporting amounts from Form 8986. All adjustments
(positive and negative) from a Form 8986 should be shown as
reported on that form. When entering adjustments from a Form
8986, enter amounts from Form 8986, Part V, column (h), which
reflect the adjustments net of any approved modifications
(column (g) of Form 8986). These amounts should be entered in
the applicable columns (a) through (d) that correspond to the
partner’s affected year. However, if Form 8986 is a result of an
AAR partnership (and not an audited partnership), no
modifications should be shown on Part V, column (g), of that
Form 8986 and no modifications should be reported on
Schedule A.
Line 15. Form 8986, Part V, Applicable Penalties, lists which
penalties, if any, apply and which line items are affected. If
penalties apply, include a statement showing how the penalties
were figured and enter the amount of penalties in the applicable
column(s) of Form 8978. Penalties for each applicable tax year
should be reported on line 15, columns (a) through (d).
Line 17. Interest on any increase in income tax is figured from
the original due date of your income tax return for each tax year
to which an increase in tax is attributable, as determined under
section 6226(b)(3). Interest is computed at the underpayment
rate under section 6621(a)(2), but substituting “five percentage
points” for “three percentage points” for purposes of section
6621(a)(2)(B) (that is, the sum of the federal short-term rate plus
five percentage points instead of three percentage points). For
additional reporting year tax reported as a result of a Form 8986
from an AAR, this substitution is not made. Interest for each
applicable tax year should be reported on line 17, columns (a)
through (d).
Schedule A line instructions.
Line 1—Income. Enter all the adjustments individually from
Form 8986, Part V, that affect taxable income. Generally, this
includes adjustments to ordinary income, rental income, interest
income, dividends, royalties, gains and losses, and other
income. Also include related amounts and adjustments not on
Form 8986 that result from changes to partner-level tax attributes
and other items as a result of adjustments from Form 8986.
Line 2—Total adjustments to income. Enter the total of all
adjustments from line 1. Carry the total of each column to the
corresponding column on Form 8978, line 1b.
Line 3—Deductions. Enter all the adjustments individually
from Form 8986, Part V, that affect deductions from income.
Generally, this includes adjustments to separately stated items
such as a section 179 deduction. Also include related amounts
and adjustments not on Form 8986 that result from changes to
partner-level tax attributes as a result of adjustments from Form
8986.
Line 4—Total adjustments to deductions. Enter the total of
all adjustments from line 3. Carry the total of each column to the
corresponding column on Form 8978, line 3b.
Line 5—Credits. Enter all the adjustments individually from
Form 8986, Part V, that affect tax credits. Also include related
amounts and adjustments not on Form 8986 that result from
changes to partner-level tax attributes as a result of adjustments
from Form 8986.
Line 6—Total adjustments to credits. Enter the total of all
adjustments from line 5. Carry the total of each column to the
corresponding column on Form 8978, line 9b.
Note. Interest should not be calculated on any decreases in tax
on line 13 for a tax year.
Note. Interest on penalties is figured in the same manner as
interest on tax, except it is figured from the due date of the
partner’s return including any valid extensions that were filed by
the partner.
Where to report additional reporting year tax. The total
additional reporting year tax from Form 8978, Part I, line 14, is
reported on the appropriate lines of the partner’s reporting year
return (see the instructions for the applicable reporting year tax
return). The additional penalties and interest should be included
in the net payment calculation for the partner’s reporting tax year
but these are not reported on the partner’s reporting year return
and are not included in the additional reporting year tax.
Specific Instructions for Schedule A
(Form 8978)
Inconsistent Positions
If you originally reported an amount for an item inconsistent with
the amount reported to you by the partnership on Schedule K-1
or Schedule K-3, and this same item is included as an
adjustment on the Form 8986 received, you should also include
the amount of inconsistency for that item on Schedule A (Form
8978).
Adjustments. Enter the description of the item that
corresponds to the Schedule K-1 or Schedule K-3 line number
and title as reflected in columns (a) and (b) of Form 8986, Part V.
For example, if Form 8986, Part V, column (a), shows “1” and
column (b) shows “Ordinary business income,” enter on
Schedule A, Adjustments column, “Schedule K-1, line 1,
Ordinary business income.” For adjustments due to changes in
partner tax attributes, use the description used on the partner’s
return.
Example 4. Inconsistent position and BBA audit
adjustment. Mary Johnson, a partner and calendar year
taxpayer, received a tax year 2022 Schedule K-1 with $100 of
ordinary business income. If she only reported $70 on her Form
1040 or 1040-SR, she would have taken a $30 inconsistent
position on her Form 1040 or 1040-SR. If she subsequently
receives a Form 8986 for affected tax year 2022, with an audit
adjustment reflecting a $50 increase to the Schedule K-1, line 1,
Ordinary business income amount, she would have two amounts
to enter on Schedule A (Form 8978). First, Mary would enter on
line 1a “Schedule K-1, line 1, Ordinary business income” in the
adjustments column and $50 in column (a), which would be
labelled “12/31/2022.” Second, Mary would enter on line 1b
Note. Schedule K-3 (Form 1065) adjustments that do not
directly increase or decrease a partner's taxable income should
be reported with a zero amount on Schedule A (Form 8978), with
any corresponding change to the partner's tax attributes, such as
the foreign tax credit, shown as a positive (increase) or negative
(decrease) amount.
Tracking number. If an adjustment is from a Form 8986, the
tracking number column should be completed for that
adjustment line. The tracking number can be found at the top of
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Instructions for Form 8978 (Jan. 2024)
“Inconsistent position previously taken on line 1a item” in the
adjustments column and $30 in column (a). Because she
received a Form 8986 from an audit, Mary must now resolve the
inconsistency with the original Schedule K-1. If she had no other
adjustments, the amount of her total adjustments to income on
line 2 of Schedule A, column (a), would be $80. She would carry
this amount to Form 8978, line 1b, column (a).
ensure that you are complying with these laws and to allow us to
figure and collect the right amount of tax.
You are not required to provide the information requested on
a form that is subject to the Paperwork Reduction Act unless the
form displays a valid OMB control number. Books or records
relating to a form or its instructions must be retained as long as
their contents may become material in the administration of any
Internal Revenue law. Generally, tax returns and return
Note. A partner’s requirement to treat partnership-related items
consistently applies to adjustments that result from an audited
partnership or an AAR partnership regardless of whether the
partner previously treated the item inconsistently. However,
partners that properly and timely file a subsequent Form 8082,
Notice of Inconsistent Treatment or Administrative Adjustment
Request (AAR), for items that are adjusted as part of an AAR
filing are not required to treat the items on Schedule A (Form
8978) consistent with the partnership’s treatment.
information are confidential, as required by section 6103.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated burden
for business taxpayers filing this form is approved under OMB
control number 1545-0123 and is included in the estimates
shown in the instructions for their business income tax return.
If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we would
be happy to hear from you. See the instructions for the tax return
with which this form is filed.
Paperwork Reduction Act Notice. We ask for the information
on this form to carry out the Internal Revenue laws of the United
States. You are required to give us the information. We need it to
6
Instructions for Form 8978 (Jan. 2024)