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Formularul 665-X Instrucțiuni

Instrucțiuni pentru formularul 1065-X, cererea de returnare modificată sau de ajustare administrativă (AAR)

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  • Formularul 1065-X - Cerere de returnare modificată sau de ajustare administrativă (AAR)
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Department of the Treasury  
Internal Revenue Service  
Instructions for Form 1065-X  
Amended Return or Administrative Adjustment Request (AAR)  
(Rev. August 2023)  
Section references are to the Internal Revenue Code  
unless otherwise noted.  
2018 version of Form 1065-X available at IRS.gov/pub/irs-  
Part I, Section 2—BBA AAR. Item C2 has been added  
to indicate when adjustments don’t result in an imputed  
underpayment.  
Part II, line 13, changed. Part II, line 13a, is changed  
from “Contributions” to “Cash contributions.New line 13b  
is “Noncash contributions.Prior year lines 13b, 13c, and  
13d are changed to 13c, 13d, and 13e, respectively. This  
follows similar changes on the 2023 Form 1065.  
Contents  
Page  
What’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1  
Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1  
Purpose of Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2  
Who Must File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3  
What To Attach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3  
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4  
Specific Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 6  
Part I. Classification of Filer . . . . . . . . . . . . . . . . . 6  
Reminders  
Part II—Amended or Administrative  
The Bipartisan Budget Act of 2015 (BBA) created a new  
centralized partnership audit regime generally effective for  
partnership tax years beginning after 2017.  
Adjustment Request (AAR) Items for  
Partnerships Filing Form 1065 Only (ELPs  
and REMICs Use Part III) . . . . . . . . . . . . . . . . . 8  
The Tax Equity and Fiscal Responsibility Act of 1982  
(TEFRA) generally applied to tax years beginning before  
2018. BBA repealed TEFRA and the electing large  
partnership (ELP) rules. Consequently, former ELPs are  
now treated as other partnerships under the BBA regime.  
Although BBA repealed the ELP rules for partnership  
tax years beginning after 2017, and although Form  
1065-B and its instructions are obsolete for tax years  
beginning after 2017, Form 1065-B is referred to in these  
instructions to assist former ELPs filing amended returns.  
Election into BBA for tax years beginning before  
2018. A partnership may make an election into the  
centralized partnership audit regime for tax years that  
begin after November 2, 2015, and before January 1,  
2018, by filing an AAR. Refer to Regulations section  
301.9100-22 for detailed information. If the AAR is filed on  
paper, the partnership uses Form 1065-X and must make  
the election in accordance with section 1101(g)(4) of BBA.  
Note. An AAR filed with respect to a 2018 short tax  
period return by a partnership that is subject to the  
centralized partnership audit regime must meet the  
requirements under section 6227.  
Forms 8985 and 8986 . . . . . . . . . . . . . . . . . . 9  
Amended Schedules K-1 . . . . . . . . . . . . . . . 9  
Amended/Corrected Sch. K-2, K-3, on/  
after 1-1-2021 . . . . . . . . . . . . . . . . . . . . . 9  
Part III—Amended or Administrative  
Adjustment Request (AAR) Items for ELPs  
and REMICs Only . . . . . . . . . . . . . . . . . . . . . . 9  
Amended Schedules K-1 or Schedules Q . . . 10  
Part IV—Imputed Underpayment (IU) Under  
the Centralized Partnership Audit Regime . . . . 10  
Figuring the IU . . . . . . . . . . . . . . . . . . . . . . 11  
Partnership-Partner Amended Return  
Filed as Part of Modification . . . . . . . . . . . 13  
Partnership-Partners Who Are Allocated  
Adjustments That Don't Result in an  
IU. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14  
Part V—Explanation of Changes to Items in  
Part II and Part III . . . . . . . . . . . . . . . . . . . . . 14  
Future Developments  
For the latest information about developments related to  
Form 1065-X and its instructions, such as legislation  
enacted after they were published, go to IRS.gov/  
Making the election for eligible tax years on an AAR  
filed on paper. To make the election, the partnership  
must write across the top of Form 1065-X used to file the  
AAR, “Election under Section 1101(g)(4)” and attach a  
statement to the AAR. For the statement requirement, the  
partnership can use Form 7036, Election Under Section  
1101(g)(4) of the Bipartisan Budget Act of 2015. If Form  
7036 isn’t used, the partnership may prepare its own  
statement with the following information.  
For information pertaining to BBA partnerships filing Form  
1065-X, go to IRS.gov/bbaaar.  
What’s New  
Which revision of Form 1065–X to use. For tax years  
beginning on or after January 1, 2023, use the August  
2023 revision of Form 1065-X. For tax years beginning  
after December 31, 2020, and before January 1, 2023,  
use the December 2021 revision of Form 1065-X available  
beginning prior to January 1, 2021, use the September  
The partnership's name, the taxpayer identification  
number (TIN), and the partnership tax year for which the  
election is being made.  
The name, TIN, address, and daytime telephone  
number of the individual who signs the statement.  
Language indicating that the partnership is electing  
application of section 1101(c) of BBA for the partnership  
return for the eligible tax year.  
Dec 26, 2023  
Cat. No. 57876S  
   
The information required to properly designate the  
and send Forms 8986 to its partners. The BBA  
partnership isn’t required to provide the five items of  
information again on Forms 8985 and 8986. The BBA  
partners don’t need to attach the five items of information  
to their original returns to which their Forms 8986 are  
attached. For more information, see Research Credit  
Claims (Section 41) on Amended Returns Frequently  
Schedules K-2 and K-3. For tax years beginning on or  
after January 1, 2021, filers of Form 1065-X may need to  
include amended Schedules K-2 and K-3 (Form 1065)  
according to the type of partnership (for example, BBA vs.  
partnership representative (PR), as defined by section  
6223, which must include the name, TIN, address, and  
daytime telephone number of the PR.  
The following representations must be made with re-  
gard to the statement attached to the election.  
The partnership isn’t insolvent and doesn’t reasonably  
anticipate becoming insolvent before resolution of any  
adjustment with respect to the partnership tax year for  
which the election is being made.  
The partnership hasn’t voluntarily filed, and doesn't  
reasonably anticipate filing, a petition for relief under title  
11 of the United States Code.  
The partnership isn’t subject to, and doesn't reasonably  
anticipate becoming subject to, an involuntary petition for  
relief under title 11 of the United States Code.  
Note. Unless otherwise noted, references to sections  
6221 through 6241 are to Internal Revenue Code  
sections, as amended by BBA.  
The partnership has sufficient assets, and reasonably  
anticipates having sufficient assets, to pay a potential  
imputed underpayment (IU) with respect to the  
partnership tax year that may be determined under  
subchapter C of chapter 63 of the Internal Revenue Code,  
as amended by BBA.  
General Instructions  
A representation, signed under penalties of perjury, that  
Purpose of Form  
the individual signing the statement is duly authorized to  
make the election described in Regulations section  
301.9100-22 and that, to the best of the individual's  
knowledge and belief, all of the information contained in  
the statement is true, correct, and complete.  
Use Form 1065-X, if you aren’t filing electronically, to:  
Correct items on a previously filed Form 1065, Form  
1065-B, or Form 1066;  
Make an AAR for a previously filed Form 1065, Form  
1065-B, or Form 1066; or  
The statement must be signed and dated by the tax  
matters partner (TMP), as defined under section 6231(a)  
(7) (prior to amendment by BBA), and the applicable  
regulations, or an individual who has the authority to sign  
the partnership return for the tax year. The fact that an  
individual dates and signs the statement making the  
election shall be prima facie evidence that the individual is  
authorized to make the election on behalf of the  
partnership.  
Increased research credit reported by a BBA partner-  
ship. If an increased research credit is reported by a BBA  
partnership, the BBA partnership doesn’t file an amended  
return. Instead, the BBA partnership must file an AAR and  
attach the following five items of information to that AAR.  
File an amended return by a partnership-partner of a  
BBA partnership as part of the modification process of a  
BBA proceeding with respect to that BBA partnership.  
Form 1065-X can’t be used to file a notice of  
inconsistent treatment under section 6222 (TEFRA or  
BBA) or a partner-level AAR under section 6227(d) (under  
TEFRA proceedings). For a definition of TEFRA  
proceedings, see Definitions, later. Continue to use Form  
8082, Notice of Inconsistent Treatment or Administrative  
Adjustment Request (AAR), to make those changes.  
Bipartisan Budget Act (BBA). All partnerships with tax  
years beginning after 2017 are subject to the centralized  
partnership audit regime unless eligible partnerships elect  
out by making a valid election under section 6221(b). For  
purposes of these instructions (unless otherwise noted),  
the centralized partnership audit regime proceedings  
under sections 6221 through 6241 will be referred to as  
“BBA proceedings.”  
If you're a nonTEFRA partnership (see Definitions and  
Section I, Part I, items B and C, later) or a nonBBA  
partnership (defined under Definitions, later) filing an  
amended return electronically, use Form 1065 and see the  
related instructions. If you aren’t filing electronically, use  
Form 1065-X.  
Form 1065-X should only be used to make a paper  
filing. For electronic filing, use Form 8082 in conjunction  
with Form 1065 or 1065-B, as applicable.  
Generally, the criteria used to determine whether the  
original Form 1065 or Form 1065-B is required to be filed  
electronically are also used to determine if the amended  
return or AAR must be filed electronically.  
1. Identify all the business components to which the  
section 41 research credit relates for that tax year.  
2. For each business component, identify all research  
activities performed.  
3. Name the individuals who performed each research  
activity.  
4. The information each individual sought to discover.  
5. The total qualified employee wage expenses, total  
qualified supply expenses, and total qualified contract  
research expenses for the claim year. This may be done  
using Form 6765, Credit for Increasing Research  
Activities.  
Because an increased research credit is being reported  
in this circumstance, as part of the AAR process, the BBA  
partnership will also submit Form 8985,  
Pass-Through—Transmittal/Partnership Adjustment  
Tracking Report, and Form 8986, Partner’s Share of  
Adjustment(s) to Partnership-Related Item(s), to the IRS  
For information regarding when Form 1065 is required  
to be filed electronically, and how to electronically file an  
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Instructions for Form 1065-X (Rev. 08-2023)  
 
amended return or AAR for a partnership, see the  
Instructions for Form 1065.  
For information regarding when Form 1065-B is  
required to be filed electronically, and how to file an AAR  
for an ELP, see the Instructions for Form 1065-B.  
When To File  
Generally, a pass-through entity may file an amended  
return or AAR to change items on its return:  
Within 3 years after the later of the date on which the  
partnership return for that year is filed, or the last day for  
filing the partnership return for that year (excluding  
extensions); and  
Who Must File  
Amended return. Partnerships and real estate mortgage  
investment conduits (REMICs) that become aware of  
incorrect items of income, deductions, etc., use Form  
1065-X to correct their previously filed partnership or  
REMIC return. See Specific Instructions, later, for  
information on completing Form 1065-X as an amended  
return.  
In the case of a TEFRA partnership or REMIC, before a  
notice of final partnership administrative adjustment for  
that year is mailed to the TMP or tax matters person, or, in  
the case of an ELP, before the mailing to the partnership of  
a notice of partnership administrative adjustment with  
respect to that year;  
In the case of a BBA partnership, before a notice of an  
administrative proceeding with respect to the tax year is  
mailed under section 6231; or  
AAR-Partnerships (except ELPs). Partnerships that are  
subject to either BBA or TEFRA proceedings use Form  
1065-X to file for an AAR. See Specific Instructions, later,  
for information on completing Form 1065-X as an AAR.  
In the case of a partnership that is a partner in a BBA  
partnership which is filing an amended return for purposes  
of BBA partnership modification under section 6225(c)(2),  
in the time period specified under section 6225(c).  
Protective TEFRA AARs. Generally, a protective AAR is  
a request for credit or refund based on current litigation or  
expected changes in tax law or other legislation. The TMP  
or partner with authority (PWA) files a protective AAR  
when the right to a refund is contingent on future events  
and may not be determinable until after the period for filing  
an AAR has expired. Protective AARs are subject to AAR  
statutes set forth in sections 6227, 6228, and 6229 (prior  
to amendment by BBA). If you're a TMP filing on behalf of  
the partnership, the petition period described in section  
6228 (prior to amendment by BBA) can be extended by  
using Form 9248, Agreement to Extend the Time to File a  
Petition for Adjustment by the Tax Matters Partner With  
Respect to Partnership Items. A protective AAR must  
clearly state that it is a protective AAR, alert the IRS to the  
essential nature of the adjustment, and specify the line  
item to be protected.  
AAR under BBA. File Form 1065-X if you're the PR or  
designated individual (DI) requesting an administrative  
adjustment to correct a previously filed partnership return  
on behalf of the BBA partnership. Go to IRS.gov/bbaaar  
for additional information.  
AAR-ELPs. ELPs that aren’t required to electronically file  
Form 1065-B and need to correct errors on a previously  
filed Form 1065-B use Form 1065-X to file for an AAR.  
See Specific Instructions, later, for information on  
completing Form 1065-X as an AAR.  
What To Attach  
If the corrected amount involves an item that must be  
supported with a schedule, statement, or form, attach the  
appropriate schedule, statement, or form to Form 1065-X.  
Include the entity's name and employer identification  
number (EIN) on any attachments. See the instructions for  
Form 1065, 1065-B, or 1066 (as applicable) for a list of  
forms that may be required.  
If the attachments needed to support the corrected  
amount include copies of forms or schedules from  
previously filed tax returns, write at the top of each  
previously filed form or schedule, “Copy Only—Do Not  
Process.”  
A BBA partnership must attach a schedule to Form  
1065-X that supports the position(s) reported. If the  
partnership doesn't make the election under section  
6227(b)(2) to have the adjustments taken into account by  
the reviewed year partners and would like to modify per  
section 6227(b)(1), it must attach Form 8980, Partnership  
Request for Modification of Imputed Underpayments  
Under IRC Section 6225(c), to support any modifications  
made to the IU, as described in sections 6225(b) and (c),  
and as applied to a BBA AAR under section 6227(b)(1).  
See Modifications to an Imputed Underpayment Included  
in an Administrative Adjustment Request in Pub. 5346,  
Instructions for Form 8980.  
AAR-REMICs. REMICs that don’t meet the small REMIC  
exception under sections 860F(e) and 6231 (prior to  
amendment by BBA), and related regulations, or make the  
election described in section 6231(a)(1)(B)(ii) (prior to  
amendment by BBA) not to be treated as a small REMIC,  
use Form 1065-X to file for an AAR. See Specific  
Instructions, later, for information on completing Form  
1065-X as an AAR.  
In addition, if the ELP or REMIC requests that the IRS  
electronically deposit a refund of $1 million or more, attach  
Form 8302, Electronic Deposit of Tax Refund of $1 Million  
or More.  
Who Must Sign  
NonTEFRA and nonBBA partnerships. Any partner or  
limited liability company (LLC) member must sign the  
return. Form 1065-X isn’t considered to be a return unless  
it is signed. When a return is made for a partnership by a  
receiver, trustee, or assignee, the fiduciary must sign the  
return instead of the partner or LLC member. Returns and  
forms signed by a receiver or trustee in bankruptcy on  
behalf of a partnership must be accompanied by a copy of  
When a partnership's or REMIC's federal return is  
changed for any reason, it may affect its state  
return. For more information, contact the state tax  
TIP  
agency with which the state return is filed.  
Instructions for Form 1065-X (Rev. 08-2023)  
3
     
the order or instructions of the court authorizing the  
signing of the return or form.  
Pass-through entity. A partnership (including an ELP),  
S corporation, estate, trust, or REMIC.  
BBA partnerships. The PR or DI, if applicable, must sign  
Form 1065-X. See Partnership representative (PR), later,  
for the definition of a PR.  
TEFRA partnerships. The TMP must sign Form 1065-X.  
See Tax matters partner (TMP), later, for the definition of a  
TMP.  
Item. Any item of a partnership, S corporation, estate,  
trust, or REMIC required to be taken into account for the  
pass-through entity's tax year by the partners,  
shareholders, beneficiaries, owners, or residual interest  
holders of that pass-through entity.  
Tax matters partner (TMP). If the partnership is subject  
to the TEFRA procedures, it can designate a partner as  
the TMP for the tax year for which the return is filed. The  
TMP is a general partner (in most cases, the TMP must  
also be a U.S. person) designated by the partnership to  
represent the partners in the consolidated audit and  
litigation proceedings under sections 6221 through 6234  
prior to amendment by BBA (TEFRA proceedings). The  
designation is made by completing the Designation of Tax  
Matters Partner section of Form 1065 used for tax years  
beginning before 2018.  
Additionally, a REMIC may designate a tax matters  
person in the same manner in which a partnership may  
designate a TMP under Regulations section 301.6231(a)  
(7)-1. When applying that section, treat all holders of a  
residual interest in the REMIC as general partners. The  
designation may be made by completing the Designation  
of Tax Matters Person section of Form 1066 for tax years  
beginning before 2018.  
ELPs. The PWA must sign Form 1065-X. See Partner  
with authority (PWA), later, for the definition of a PWA.  
REMICs with a startup day after November 9, 1988.  
For these REMICs, Form 1065-X may be signed by any  
person who could sign the return of the entity in the  
absence of the REMIC election. Thus, the return of a  
REMIC that is a corporation or trust would be signed by a  
corporate officer or a trustee, respectively. For REMICs  
with only segregated pools of assets, the return would be  
signed by any person who could sign the return of the  
entity owning the assets of the REMIC under applicable  
state law.  
REMICs with a startup day before November 10,  
1988. These REMICs may elect to apply the rules for  
REMICs with a startup day after November 9, 1988 (as  
described in Regulations section 1.860F-4(c)(2)(iii)).  
Otherwise, Form 1066 must be signed by a residual  
interest holder or, as provided in section 6903, by a  
fiduciary, as defined in section 7701(a)(6), who is acting  
for the REMIC and who has furnished adequate notice, as  
described in Regulations section 301.6903-1(b).  
In the prior paragraph, the term “startup day” means  
any day selected by a REMIC that is on or before the first  
day on which interests in such REMIC are issued.  
Otherwise, the startup day is the day on which the REMIC  
issued all of its regular and residual interests. However, a  
sponsor may contribute property to a REMIC in exchange  
for regular and residual interests over any period of 10  
consecutive days and the REMIC may designate any 1 of  
those 10 days as the startup day. The day so designated  
is then the startup day, and all interests are treated as  
issued on that day.  
For an LLC, a member of the LLC is treated as a  
partner and a member-manager is treated as a general  
partner. A member-manager is any owner of an interest in  
the LLC who, alone or together with others, has continuing  
exclusive authority to make the management decisions  
necessary to conduct the business for which the LLC was  
formed. If there are no elected or designated  
member-managers, each owner is treated as a  
member-manager. For details, see Regulations section  
301.6231(a)(7)-2.  
BBA partnership. A partnership that is subject to the  
centralized partnership audit regime is a “BBA  
partnership.All partnerships with tax years beginning  
after 2017 are BBA partnerships unless they make a valid  
election out of the centralized partnership audit regime. A  
partner in a BBA partnership is a “BBA partner.An AAR  
filed by a BBA partnership is a “BBA AAR” and must be  
filed by the PR. Go to IRS.gov/bbaaar for additional  
information.  
Partnership representative (PR). If the partnership is  
subject to the centralized partnership audit regime,  
section 6223 provides that the partnership must designate  
a partner or other person with a substantial presence in  
the United States as the PR who shall have the sole  
authority to act on behalf of the partnership. If the PR is an  
entity, the partnership must also appoint a DI to act on  
behalf of the entity PR. The partnership and all partners  
are bound by the actions of the PR in dealings with the  
IRS under BBA.  
Where To File  
Form 1065-X must be filed with the service center where  
the original return was filed.  
Definitions  
TEFRA partnership. The consolidated audit  
proceedings of sections 6221 through 6234 (prior to  
amendment by BBA) are “TEFRA proceedings” and  
partnerships that are subject to TEFRA proceedings are  
“TEFRA partnerships.An AAR filed by the TMP of the  
TEFRA partnership is a TEFRA AAR. Any partner in a  
TEFRA partnership may file an AAR using Form 8082.  
TEFRA proceedings won’t apply to partnerships with tax  
years beginning after 2017.  
Partner with authority (PWA). Each ELP must  
designate a partner (or other person) as the PWA who  
shall have the sole authority to act on behalf of the  
partnership. See section 6255(b)(1) (prior to amendment  
by BBA). If the partnership fails to designate a PWA, the  
NonTEFRA partnership. A partnership with a tax year  
beginning before 2018 that isn’t subject to TEFRA  
proceedings and didn't elect into BBA for that tax year  
beginning after November 2, 2015, and before January 1,  
2018, is a “nonTEFRA partnership.”  
4
Instructions for Form 1065-X (Rev. 08-2023)  
         
IRS can select any partner to serve as the partner with  
such authority. The PWA has the authority to file an AAR  
on behalf of the partnership. The PWA does this by filing  
Form 1065-X.  
NonBBA partnership. Under BBA, certain partnerships  
with 100 or fewer eligible partners for the tax year can  
elect out of the centralized partnership audit regime. For  
additional information, see the Instructions for Form 1065.  
A partnership that elects out of the centralized partnership  
audit regime is a “nonBBA partnership.”  
Generally, anyone who is paid to prepare Form 1065-X  
must do the following.  
Sign the return in the space provided for the preparer's  
signature.  
Fill in the other blanks in the “Paid Preparer Use Only”  
area of the return. A paid preparer can’t use a social  
security number in the “Paid Preparer Use Only” box. The  
paid preparer must use a preparer tax identification  
number (PTIN).  
Give the partnership or REMIC a copy of the return in  
addition to the copy to be filed with the IRS.  
Partnership-related item (PRI). For BBA partnerships,  
under section 6241(2)(B), a PRI is any item or amount  
with respect to the partnership that is relevant in  
determining the income tax liability of any person, without  
regard to whether the item or amount appears on the  
partnership's return. This includes an IU and an item or  
amount relating to any transaction with, basis in, or liability  
of the partnership.  
A paid preparer may sign original or amended  
returns by rubber stamp, mechanical device, or  
computer software program.  
TIP  
Interest and Penalties  
Interest. Generally, interest is charged on taxes not paid  
by the due date, even if an extension of time to file is  
granted. Interest is also charged on penalties imposed for  
negligence, fraud, substantial valuation misstatements,  
substantial understatements of tax, and reportable  
transaction understatements. The interest is charged from  
the due date (including extensions) to the date of  
payment. The interest charge is figured at a rate  
determined under section 6621.  
Adjustment year. For BBA partnerships, the adjustment  
year is the partnership tax year in which:  
An adjustment pursuant to the decision of a court in a  
proceeding brought under section 6234 becomes final;  
An AAR is filed under section 6227; or  
A notice of final partnership adjustment is mailed under  
section 6231 or, if the partnership waives the limitations  
on assessments under section 6232(b), the waiver is  
executed by the IRS.  
Late payment penalty. The penalty for not paying the  
tax when due is usually 1/2 of 1% of the unpaid tax for  
each month or part of a month that the tax remains  
unpaid. The penalty can’t exceed 25% of the unpaid tax.  
Other penalties. Penalties can also be imposed for  
negligence, substantial understatements of tax, reportable  
transaction understatements, and fraud. See sections  
6662, 6662A, and 6663.  
Reviewed year. For BBA partnerships, the reviewed year  
is the partnership’s tax year to which a partnership  
adjustment relates.  
Reviewed year pass-through partner. For purposes of  
these instructions, under BBA, a reviewed year  
pass-through partner is a pass-through entity that held an  
interest in a BBA partnership at any time during the  
reviewed year, which is the partnership tax year to which  
the partnership adjustment relates. For example, if the  
BBA AAR is filed to make an adjustment to income for the  
2023 tax year, 2023 is the reviewed year.  
Schedule K-1. Schedule K-1 is the annual schedule  
reporting the partner's, shareholder's, or beneficiary's  
share of income, deductions, credits, etc., from a  
partnership, S corporation, estate, or domestic trust.  
Schedule K-2. An extension of Form 1065, Schedule K,  
used to report items of international tax relevance from the  
operation of a partnership.  
Schedule K-3. An extension of Schedule K-1 (Form  
1065) generally used to report to partners their share of  
the items reported on Schedule K-2.  
Interest and penalties applicable to IU. Except when  
the partnership elects to have its partners take into  
account the adjustments, BBA partnership interest and  
penalties are the following.  
The interest figured with respect to any IU is the interest  
which would be determined under chapter 67 for the  
period beginning on the day after the return due date for  
the reviewed year and ending on the return due date for  
the adjustment year, as defined under section 6225(d)(2)  
or, if earlier, the date the IU is paid.  
Any penalty, addition to tax, or additional amount shall  
be determined at the partnership level and is applied as if  
such BBA partnership had been an individual subject to  
tax under chapter 1 for the reviewed year and the IU were  
an actual underpayment (or understatement) for such year  
for purposes of part II of subchapter A or chapter 68.  
Election to apply the alternative to payment of the IU.  
If the partners must take into account the adjustments  
because the BBA partnership filed an AAR and there are  
adjustments that don’t result in an IU, or if a BBA  
partnership elects the alternative to payment of the IU  
under sections 6227(b)(2) and 6226(c), interest shall be  
determined:  
Schedule Q. Schedule Q is the quarterly schedule  
reporting the residual interest holder's share of taxable  
income or net loss from the REMIC.  
Paid Preparer's Information  
If a partner or an employee of the partnership or REMIC  
completes Form 1065-X, the “Paid Preparer Use Only”  
section should remain blank. In addition, anyone who  
prepares Form 1065-X but doesn't charge the partnership  
or REMIC shouldn’t complete this section.  
At the partner level;  
From the due date of the return for the tax year to which  
the increase is attributable (determined by taking into  
account any increases attributable to a change in tax  
Instructions for Form 1065-X (Rev. 08-2023)  
5
 
attributes for a tax year under section 6226(b)(2)), until the  
date of payment; and  
ELPs/REMICs The ELP procedures were repealed for  
tax years beginning after 2017. However, ELPs filing a  
non-e-filed AAR for a tax year that began before 2018 will  
use Form 1065-X.  
At the section 6621(a)(2) underpayment rate.  
Judicial review of an AAR (for returns subject to the  
TEFRA procedures or ELPs). If the IRS fails to act on  
an AAR, the TMP or PWA may file a petition for judicial  
review with the U.S. Tax Court, U.S. Court of Federal  
Claims, or U.S. District Court. The TMP or PWA must file  
the petition before the date that is 2 years after the date  
the TMP or PWA filed the AAR, but not until after the date  
that is 6 months from the date of such filing. The 2-year  
period may be extended if the IRS and the TMP or PWA  
agree in writing. For more details, see sections 6228 (prior  
to amendment by BBA) and 6252.  
For Partnership Tax Years Beginning After 2017  
and Partnerships Electing Into BBA for Tax Years  
Beginning After November 2, 2015, and Before  
January 1, 2018  
BBA AAR. All partnerships with tax years beginning after  
2017 are subject to the centralized partnership audit  
regime unless an eligible partnership makes a valid  
election under section 6221(b) to elect out of the  
centralized partnership audit regime. Partnerships electing  
into BBA for tax years beginning after November 2, 2015,  
and before January 1, 2018, are also subject to the  
centralized partnership audit regime. Partnerships that are  
subject to the centralized partnership audit procedures of  
sections 6221 through 6241 are “BBA partnerships.An  
AAR filed by a BBA partnership is a BBA AAR.  
nonBBA. A partnership with a tax year beginning after  
2017 that isn't subject to BBA proceedings because it has  
made a valid election under section 6221(b) is a “nonBBA  
partnership.”  
Specific Instructions  
If, after reading the instructions, you're unable to complete  
an item in Part I or Part II, enter “See Part V” in the entry  
space for that item and provide the information there.  
Name and Identifying Number  
Enter the legal name of the entity and identifying number  
on the appropriate lines. Include the suite, room, or other  
unit number after the street address. If the Post Office  
doesn't deliver mail to the street address and the entity  
has a P.O. box, show the box number instead.  
Partnership-Partner Amended Return Related to  
Modification of Another Partnership’s IU  
If the entity receives its mail in care of a third party  
(such as an accountant or attorney), enter on the street  
address line “C/O” followed by the third party's name and  
street address or P.O. box.  
A partner that is itself a partnership (partnership-partner)  
that is filing an amended return as part of modification of  
the IU under section 6225(c)(2) should check this box.  
If the entity's address is outside the United States, or its  
possessions or territories, enter the information on the line  
for “City or town, state, and ZIP code” in the following  
order: city, province or state, and foreign country. Follow  
the foreign country's practice in placing the postal code in  
the address. Don’t abbreviate the country name.  
Section 1—TEFRA/NonTEFRA Determination  
Item A  
If the answer to item A is “Yes,the partnership return isn’t  
subject to the TEFRA proceedings. You should proceed to  
item E and check the “Not subject to TEFRA” box.  
Part I. Check the Appropriate Box  
An AAR can be filed by a partnership subject to TEFRA  
proceedings (TEFRA AAR), a partnership subject to BBA  
proceedings (BBA AAR), an ELP, and a REMIC.  
Items B Through E  
These items are used to determine if the partnership is  
subject to the rules for consolidated audit procedures  
(TEFRA procedures).  
If you're a BBA partnership that has received a notice of  
administrative proceeding, you may not file an AAR. Also,  
a partner may not file an AAR on behalf of the BBA  
partnership in which it is a partner unless doing so in its  
capacity as the PR for that partnership.  
Consolidated REMIC proceedings. Generally, the tax  
treatment of REMIC items is determined at the REMIC  
level in a consolidated REMIC proceeding, rather than in  
separate proceedings with individual residual interest  
holders. A REMIC subject to consolidated REMIC  
procedures will have checked the box on item G on  
page 3 of its original Form 1066 (for tax years beginning  
before January 1, 2018).  
For Partnership Tax Years Beginning Before  
January 1, 2018 (Unless Electing Into BBA)  
TEFRA AAR. The consolidated audit proceedings of  
sections 6221 through 6234 (prior to amendment by BBA)  
are “TEFRA proceedings” and partnerships that are  
subject to TEFRA proceedings are “TEFRA partnerships.”  
An AAR filed by the TMP of the TEFRA partnership is a  
TEFRA AAR. TEFRA proceedings won’t apply to  
partnerships with tax years beginning after 2017.  
nonTEFRA AAR. A partnership with a tax year beginning  
before 2018 that isn’t subject to TEFRA proceedings is a  
“nonTEFRA partnership.”  
Items B and C  
All partnerships with tax years beginning before 2018  
(except ELPs) and REMICs are subject to TEFRA  
partnership audit procedures unless the partnership or  
REMIC is subject to the small partnership exception. See  
section 6231(a)(1)(B) (prior to amendment by BBA).  
6
Instructions for Form 1065-X (Rev. 08-2023)  
   
A small partnership is a partnership with 10 or fewer  
partners at all times during the year. All partners must be  
U.S. individuals and their estates, resident alien  
individuals, or C corporations.  
(B)(ii) (prior to amendment by BBA), and related  
regulations, and you received a corrected Form 1099 or  
are making changes to income, deductions, or credits, but  
there are no flow-through changes from a TEFRA  
partnership, then you're filing an amended return. Check  
the “Amended Return” box.  
AAR. Check this box if you're filing a request to correct a  
previously filed partnership or REMIC return and you're  
one of the following.  
Note. For making the small partnership determination, a  
married couple, each spouse having their own partnership  
interest, is considered one partner. An individual who has  
passed away during the year and their estate are  
considered one partner.  
The TMP of the TEFRA partnership or REMIC. The  
REMIC must be subject to consolidated REMIC  
proceedings. For more information on consolidated  
REMIC proceedings, see the Instructions for Form 1066.  
Item D  
A partnership defined as a small partnership can elect to  
be treated as a TEFRA partnership for tax years beginning  
before 2018. The partnership elects TEFRA treatment by  
attaching a statement to the tax return for the first year  
they wish the election to be effective. This statement must  
be signed by all partners. See Regulations section  
An ELP correcting a previously filed return.  
Item G  
A substituted return requests that the treatment of an item  
shown on the AAR be substituted for the treatment of the  
item on the pass-through entity's return.  
301.6231(a)(1)-1(b). Form 8893, Election of Partnership  
Level Tax Treatment, is the statement that can be used to  
make this election. If you answer “Yes” to item D, enter the  
tax year of the filing of this election in the space provided.  
Check “Yes” if you're requesting substituted return  
treatment for the partnership. If the IRS allows substituted  
return treatment, the changes shown on the amended  
return will be treated as corrections of mathematical or  
clerical errors, and the IRS may assess any resulting tax  
to the partners or residual interest holders without a  
deficiency or entity-level proceeding. In this case, partners  
or residual interest holders may file amended returns  
requesting refunds. See section 6227(c)(1) (prior to  
amendment by BBA).  
Item E  
If, at any time during the tax year, there are more than 10  
partners or any of the following are partners in the  
partnership, then the partnership isn’t a small partnership.  
Another partnership.  
An LLC which files as a partnership or is treated as a  
disregarded entity.  
If the IRS doesn’t allow substituted return treatment for  
the partnership, the partners or residual interest holders  
may file amended returns requesting refunds. The IRS  
may conduct an examination of the pass-through entity's  
return, or take no action on the request. When a request  
isn’t treated as a substituted return, the IRS can’t assess  
tax without a deficiency or entity-level proceeding. See  
section 6227(c)(2) (prior to amendment by BBA).  
Any type of trust, including a grantor trust.  
A nominee.  
A nonresident alien.  
An S corporation.  
Table for Determining Which Box To Check in Item E  
IF in item...  
The box  
checked is...  
THEN in item E, check...  
ELPs. An ELP can’t request substituted treatment. See  
B
No  
No  
Yes  
Yes  
No  
Subject to TEFRA.  
Subject to TEFRA.  
Subject to TEFRA.  
Not subject to TEFRA.  
Not subject to TEFRA.  
section 6227(c)(1) (prior to amendment by BBA).  
C
D
Section 2—BBA AAR  
For additional information on filing BBA AARs, go to  
B and C  
D
Item A  
If the "Yes" box is checked, complete Form 8979 and  
attach it to the AAR. See the Instructions for Form 8979,  
Partnership Representative Revocation, Designation, and  
Resignation, for more information.  
Item F  
Check the box to indicate whether you're filing an  
amended return or an AAR.  
Amended Return. Check this box if you checked the  
“Not subject to TEFRA” box in item E, and you aren’t an  
ELP. This means that you're filing a request to correct a  
previously filed nonTEFRA partnership return or REMIC  
return.  
Note. If you're a BBA partnership, you may not file an  
AAR solely for the purpose of changing the PR.  
Item B  
If your partnership or REMIC return meets the  
BBA partnerships filing an AAR will need to determine if  
the partnership adjustments result in an IU. See Figuring  
the Imputed Underpayment (IU), later, for information as to  
how to figure the IU. The BBA partnership should consider  
exception under section 860F(e) or section 6231 (prior to  
amendment by BBA), and doesn't file an election to be  
treated as a TEFRA partnership under section 6231(a)(1)  
Instructions for Form 1065-X (Rev. 08-2023)  
7
all available guidance issued by the IRS in making a  
determination of whether or not the AAR results in an IU.  
Also, see Part IV, later, for discussion of the IU.  
aren’t included on the statements provided to the  
partners.  
Section 3—Partnership-Partner Amended  
Return Filed as Part of Modification of the  
Imputed Underpayment (IU) During a BBA Audit  
Section 6225(c)(2) allows a BBA partnership under  
examination to request specific types of modifications of  
an IU proposed by the IRS. One type of modification  
applies when a partner or indirect partner, including a  
partnership-partner, files an amended return for the tax  
year of the partner which includes the end of the reviewed  
year of the BBA partnership under examination. See Form  
8980, Item E, Part I, and Pub. 5346.  
Item C1  
If the adjustments contained in the BBA AAR result in an  
IU, the partnership must pay the IU at the same time the  
AAR is filed. However, under section 6227(b)(2), the  
partnership can elect to have its reviewed year partners  
take the adjustments into account. This is an election to  
push out the adjustments to the partners as an alternative  
to payment of the IU. See section 6226(a)(2) for details. If  
this valid election is made, the partnership is no longer  
liable for the IU.  
A BBA partnership under examination will be assigned  
a unique audit control number. A partnership-partner  
using Form 1065-X to file an amended return as part of a  
modification under section 6225(c)(2) must include in  
Section 3 (Form 1065-X) the name, EIN, reviewed year,  
and audit control number of the BBA partnership under  
examination to which the amended return relates. In  
addition, the partnership-partner shouldn’t furnish  
amended Schedules K-1 or K-3 to its partners, but instead  
must pay an amount computed like an IU on the  
Item C2  
The partnership will need to furnish Forms 8986 to each  
reviewed year partner reflecting the partner's share of  
adjustments for when the adjustments don't result in an IU  
(for example, the adjustments in the BBA AAR result in an  
IU of zero or less than zero; or there is a net negative  
adjustment). The partnership is also required to file with  
the AAR all Forms 8986 furnished to partners and Form  
8985. See the instructions for these forms for further  
information.  
adjustments allocable to it, plus any penalties and interest.  
See Part IV, later, for payment instructions.  
Part II—Amended or Administrative  
Adjustment Request (AAR) Items for  
Partnerships Filing Form 1065 Only  
(ELPs and REMICs Use Part III)  
Item D  
Each reviewed year partner is required to take into  
account its share of adjustments requested in a BBA AAR  
if the partnership adjustments result in a positive IU and  
the partnership makes the alternative to payment election  
discussed under Item C1, earlier. Additionally, each  
reviewed year partner is required to take into account its  
share of any adjustments requested in a BBA AAR  
resulting in an IU of zero or less than zero, or that don't  
result in an IU. The determination of whether or not an  
adjustment results in an IU amount is discussed under  
Item B, earlier.  
For information on income, deductions, credits, etc., see  
the instructions for Form 1065, Schedules K, K-1, K-2,  
and K-3 for the tax year being amended or otherwise  
adjusted. See the Instructions for Form 1065 for a list of  
forms that may be required.  
Note. In Part II of Form 1065-X, “see instructions” refers  
to the instructions for Form 1065 and Schedule K-1, not  
the Instructions for Form 1065-X.  
TEFRA partnerships filing AARs. A TEFRA partnership  
filing an AAR to change items that were reported on its  
original return must do the following.  
The partnership is required to furnish each reviewed  
year partner with a Form 8986 reporting its share of the  
BBA AAR adjustments. The PR must attest to the  
partnership’s compliance with this requirement. The PR  
will sign Form 1065-X under item D to declare, under  
penalties of perjury, that all statements have been  
provided to the reviewed year partners, as required by  
these instructions.  
1. Determine the required changes to be made.  
2. Complete Form 1065-X to identify the changes  
being made.  
a. On Form 1065-X, check the “TEFRA AAR” box  
under Part I.  
Item E  
b. See later for how to complete Part II, columns (a)  
through (c).  
Under section 6227(b)(1), the partnership may modify the  
IU resulting from adjustments reported in a BBA AAR in  
accordance with the provisions under section 6225(c),  
disregarding the provisions under paragraphs (2), (7), and  
(9). Any modification made to the IU under section  
6227(b)(1) must be disclosed and fully explained on Form  
8980 included with the AAR.  
3. Complete Form 1065-X.  
a. See Who Must Sign, earlier, for who must sign the  
Form 1065-X.  
b. Attach amended Schedules K-1 showing the  
corrected amounts for each partner.  
4. File Form 1065-X and attach any other supporting  
documents required.  
Note. If the partnership makes an election to push out the  
adjustments to the partners as an alternative to payment  
of the IU, the modifications to the IU are disregarded and  
5. Give a copy of the amended Schedules K-1 to the  
applicable partners.  
8
Instructions for Form 1065-X (Rev. 08-2023)  
   
related calculations by a pass-through partner, if  
applicable. See the instructions for these forms for further  
information.  
BBA partnerships filing AARs. A BBA partnership filing  
an AAR to change items that were reported on its original  
return must do the following.  
1. Determine the required changes to be made.  
Amended Schedules K-1  
2. Complete Form 1065-X to identify the changes  
If a BBA partnership files an AAR and needs to make its  
partners aware of their allocable share of adjustments, it  
will furnish to each partner for the reviewed year Form  
8986 reflecting the partner’s share of the adjustments (and  
shouldn’t provide amended Schedules K-1). The  
partnership must also file all Forms 8986 furnished to  
partners and Form 8985 with the AAR. See the  
being made.  
a. On Form 1065-X, check the “BBA AAR” box under  
Part I.  
b. See later for how to complete Part II, columns (a)  
through (c).  
3. Figure an IU and determine if there are any  
instructions for these forms for further information. ELPs  
filing a Form 1065-X as an AAR should see Part III, later.  
All other partnerships should file amended Schedules K-1  
with Form 1065-X and furnish copies of the amended  
Schedules K-1 to the partners.  
adjustments that don’t result in an IU.  
4. Determine if you will pay the IU or push out the  
adjustments to the partners.  
a. If paying an IU, report the IU appropriately in Part IV.  
Complete Forms 8985 and 8986 (pushout package)  
pertaining to the adjustments that don’t result in an IU  
(if applicable).  
If a TEFRA partnership files Form 1065-X for an AAR, it  
should inform the partners receiving the amended  
Schedules K-1 that the partnership is filing the AAR. If the  
partnership isn’t subject to either the rules for  
b. If pushing out all the adjustments to the reviewed  
year partners, complete Forms 8985 and 8986  
(pushout package).  
consolidated audit proceedings (TEFRA proceedings)  
under sections 6221 through 6234 (prior to amendment by  
BBA) or to the centralized partnership audit regime under  
BBA, it must furnish the amended Schedules K-1 to its  
partners. The partners must then file their own amended  
returns.  
5. File Form 1065-X and attach any other supporting  
documents required, including copies of Forms 8985 and  
8986 (if applicable).  
6. If applicable, distribute the Forms 8986 to reviewed  
year partners according to the Form 8986 instructions.  
Amended or Corrected Schedules K-2 and K-3  
for Tax Years Beginning on or After January 1,  
2021  
NonBBA partnership filing an amended return.  
Attach the amended Schedule K-2 and on the header of  
the schedule enter “As Amended.” Attach the amended  
Schedules K-3 with the amended box checked at the top  
of each. The partnership must furnish the amended  
Schedules K-3 to its partners.  
BBA partnerships filing AARs. Attach the corrected  
Schedule K-2 and on the header of the schedule enter “As  
per AAR.When a BBA partnership files an AAR and  
needs to make its partners aware of their allocable share  
of adjustments, it shouldn’t issue amended Schedules K-3  
but rather file Forms 8985 and 8986 with the AAR and  
furnish Forms 8986 to partners. Refer to the instructions  
for Forms 8985 and 8986.  
Column (a). Enter the amounts from Form 1065,  
Schedule K, as originally filed or as was previously  
adjusted. If the return was changed or audited by the IRS,  
enter the amounts as adjusted.  
Column (b). Enter the net increase or decrease for each  
line being changed. Enter as a positive the amount by  
which column (c) exceeds column (a) or enter as a  
negative the amount by which column (a) exceeds column  
(c). Use parentheses around all amounts that are  
negative. Positive amounts are increases and negative  
amounts are decreases. Explain the increase or decrease  
in Part V.  
Column (c). Enter the correct amount. This will be the  
sum of column (a) and column (b).  
Forms 8985 and 8986  
If a BBA partnership files an AAR and it is making an  
election under section 6227(b)(2) to have the adjustments  
taken into account by the reviewed year partners, or (1)  
when the adjustments in the BBA AAR result in an IU of  
zero or less than zero; or (2) the adjustments don't result  
in an IU, then it will furnish to each partner for the reviewed  
year a Form 8986 reflecting the partner’s share of the  
adjustments to PRI as a result of a BBA audit or BBA AAR  
for situations where the partners are taking into account  
the adjustments. The partnership is also required to file  
with the AAR all Forms 8986 furnished to partners and  
Form 8985. Form 8985 is used to summarize and transmit  
Forms 8986, in situations where the partners are taking  
into account the adjustments. Adjustments shown on  
Form 1065-X, Part II, column (b), should tie to the  
Part III—Amended or Administrative  
Adjustment Request (AAR) Items for  
ELPs and REMICs Only  
ELPs only. An ELP may file an AAR to adjust its  
partnership items. Generally, the ELP has two choices for  
handling the adjustment.  
1. It may combine the adjustment with the same  
partnership item for the year in which the IRS allows the  
adjustment and pass it through to the current partners for  
that year. However, if the adjustment involves the  
reduction in a credit which exceeds the amount of that  
credit for the partnership tax year in which the adjustment  
is allowed, the partnership must pay tax in an amount  
equal to the excess amount.  
adjustments reported on Form 8985, Part IV, column (f).  
Form 8985 is also used to report payment(s) made and  
Instructions for Form 1065-X (Rev. 08-2023)  
9
       
2. It may elect to not pass the adjustment through to  
current partners by paying tax on any IU that results from  
the adjustment. If the partnership elects to pay the tax,  
enter it on Part III, line 16. Attach a computation of the tax  
to Form 1065-X.  
amount claimed on the original return. The IRS will figure  
any interest due and include it in the refund.  
Amended Schedules K-1 or Schedules Q  
If the ELP or REMIC is filing Form 1065-X for an AAR,  
don’t furnish the amended Schedules K-1 or Schedules Q  
to the partners or residual interest holders. If the REMIC  
isn’t filing for an AAR and isn’t subject to the rules for  
consolidated audit proceedings under sections 6221  
through 6231 (prior to amendment by BBA), the REMIC  
must furnish the amended Schedules Q to its residual  
interest holders.  
In either case, the partnership is liable for any interest  
and penalties on IUs that result from the adjustment. See  
section 6242(b) (prior to amendment by BBA) for details.  
Interest is figured on the IU for the period beginning on the  
day after the due date (excluding extensions) of the  
partnership return for the tax year the adjustment takes  
effect or, if earlier, the date the partnership paid the tax  
due under (2) above. The adjusted year is the partnership  
tax year in which the item being adjusted arose.  
ELPs and REMICs. Identify in Part III the amount and  
treatment of any item the partnership or REMIC is  
changing from the way it was reported on the original  
return.  
Part IV—Imputed Underpayment (IU)  
Under the Centralized Partnership  
Audit Regime  
BBA AARs must always include a computation of the IU  
(even when the IU is zero or less than zero, or the  
adjustments don’t result in an IU), as determined under  
section 6225(b). Where the adjustments don’t result in an  
IU, the IU should be shown as zero. Documentation  
should be included with the AAR that supports the  
computation of the IU amount. If the resulting IU amount is  
zero or less than zero, or the adjustments don’t result in an  
IU, or if the partnership is making an election under  
section 6227(b)(2) to have the adjustments taken into  
account by the reviewed year partners, Part IV, line 1,  
should be shown as zero. Otherwise, the IU amount  
should be reported on Part IV, line 1.  
Column (a). Enter a description of the item that the  
partnership or REMIC is adjusting or amending.  
Column (b). Enter the amounts from the ELP's or  
REMIC's return as originally filed or as it was later  
adjusted. If the return was changed or audited by the IRS,  
enter the amounts as adjusted.  
Column (c). Enter the net increase or net decrease for  
each line being changed. Use parentheses around all  
amounts that are decreases. Explain the increase or  
decrease in Part V.  
If the adjustments requested in the AAR result in an IU,  
generally the partnership takes the adjustments into  
account and must pay the IU. Adjustments requested in  
the AAR that result in zero, less than zero, or the  
adjustments don’t result in an IU must be taken into  
account by each reviewed year partner as if the  
partnership had made an election under section 6227(b)  
(2), but only with regard to those adjustments that don’t  
result in an IU. In this instance, see Forms 8985 and 8986  
and their related instructions for reporting amounts not  
included in the IU.  
The partnership may elect under section 6227(b)(2) to  
have the reviewed year partners take into account  
adjustments resulting in an IU. If the partnership makes  
the election, the partnership isn’t liable for, nor required to  
pay, the IU related to the adjustments. Additionally, if the  
IU calculation results in an amount that is zero, less than  
zero, or the adjustments don’t result in an IU, then all  
adjustments are taken into account by the reviewed year  
partners. However, the partnership may have withholding  
and reporting obligations under chapter 3 or chapter 4  
with respect to the adjustments taken into account by the  
reviewed year foreign partners. See the instructions for  
Form 8985 and Form 8986.  
Column (d). Enter the correct amount. This will be the  
sum of column (b) and column (c).  
Line 6. Show any increase or decrease to the ELP's tax  
or other payments.  
Line 10. Enter the total tax as follows.  
ELPs. Enter the line 6 amounts on line 10.  
REMICs. Add the amounts on lines 7 through 9 and  
enter the total for each column on line 10.  
Line 11. Enter the amount of tax paid with Form 7004,  
Application for Automatic Extension of Time To File  
Certain Business Income Tax, Information, and Other  
Returns.  
Line 14. Enter the amount from the “Overpayment” line of  
the original return, even if the ELP or REMIC chose to  
credit all or part of this amount to the next year's estimated  
tax. This amount must be considered in preparing Form  
1065-X because any refund due from the original return  
will be refunded separately from any additional refund  
claimed on Form 1065-X. If the original return was  
changed by the IRS and the result was an additional  
overpayment of tax, also include that amount on line 14.  
Line 16. If the ELP or REMIC doesn't use electronic fund  
transfers, including the Electronic Federal Tax Payment  
System (EFTPS), enclose a check with this form. Make  
the check payable to “United States Treasury.”  
Line 17. If the ELP or REMIC is entitled to a refund larger  
than the amount claimed on the original return, line 17 will  
show only the additional amount of overpayment. This  
additional amount will be refunded separately from the  
If the partnership elects under section 6227(b)(2) to  
have its reviewed year partners take all the adjustments  
into account, all modifications by the partnership (that  
would have been allowed had the partnership paid an IU)  
aren’t allowed and are disregarded.  
The partnership must always include an IU calculation,  
irrespective of whether the IU is zero (or less than zero, or  
the adjustments don’t result in an IU) or the partnership  
10  
Instructions for Form 1065-X (Rev. 08-2023)  
   
elects under section 6227(b)(2) to have its reviewed year  
partners take all the adjustments into account.  
Residual grouping. Any adjustment to a PRI that  
doesn’t belong in the reallocation, credit, or creditable  
expenditure grouping is placed in the residual grouping.  
This grouping also includes any adjustment to a PRI that  
derives from an item that wouldn’t have been required to  
be allocated by the partnership to a partner under section  
704(b), such as an adjustment to a liability amount on the  
balance sheet.  
Subgrouping. Each adjustment is subgrouped  
according to how the adjustment would be required to be  
taken into account separately under section 702(a). In  
general, a subgrouping follows Schedules K, K-1, K-2,  
and K-3 line items, including any alpha codes related to a  
Schedule K-1 line item.  
Under section 6227(b)(1), the partnership may modify  
the IU resulting from adjustments reported in a BBA AAR  
in accordance with the provisions under section 6225(c),  
disregarding the provisions under sections 6225(c)(2), (7),  
and (9). Any modification made to the IU under section  
6227(b)(1) must be disclosed and fully explained in  
documentation included with the AAR.  
If modifications are applied to the IU, complete and  
attach Form 8980 and report the modified IU amount on  
Part IV, line 1. See Part I, Section 2, Item E, earlier, for  
more information on modification.  
Negative adjustment. A negative adjustment is any  
adjustment that is a decrease in an item of gain or income;  
an increase in an item of loss or deduction; an increase in  
an item of credit or creditable expenditure; a decrease in  
an item of tax, penalty, addition to tax, or additional  
amount for which the partnership is liable under chapter 1;  
or a decrease to an IU calculated by the partnership for  
the tax year.  
The applicability of interest and penalties is discussed  
BBA AAR may include a prepayment for interest and  
penalties. If making such prepayments, the AAR should  
include documentation that supports the calculations. A  
payment made with Form 1065-X should detail the  
portions of the payment that are for the IU, prepaid  
estimated interest, and prepaid estimated penalties. The  
total of all three should be reported on Part IV, line 2.  
Positive adjustment. A positive adjustment is any  
adjustment that isn’t a negative adjustment.  
Under section 6232(a)(2), partnerships filing a BBA  
AAR that has adjustments that result in an IU, and don’t  
elect the alternative to payment of the IU (by not electing  
to push out the adjustments to the reviewed year  
partners), must pay the IU. The IU should be shown on  
Form 1065-X, Part IV, line 1, at the time of filing the AAR.  
When paying by check, include the name of the  
partnership, “Form 1065,the TIN of the partnership, the  
tax year, and “BBA AAR Imputed Underpayment.Checks  
must be made payable to “United States Treasury” and  
included with the BBA AAR. If making an electronic  
payment, choose the payment description “BBA AAR  
Imputed Underpayment” from the list of payment types.  
The payment amount, including any prepaid estimated  
interest and penalties, should be reported on Part IV,  
line 3.  
Net positive adjustment. An amount that is greater than  
zero which results from netting adjustments within a  
grouping or subgrouping. A net positive adjustment  
includes a positive adjustment that wasn’t netted with any  
other adjustment. A net positive adjustment includes a net  
decrease in an item of credit (or creditable expenditure).  
Net negative adjustment. Any amount which results  
from netting adjustments within a grouping or subgrouping  
that isn’t a net positive adjustment. A net negative  
adjustment includes a negative adjustment that wasn’t  
netted with any other adjustment.  
Total netted partnership adjustments (TNPA). The  
sum of all net positive adjustments in the reallocation  
grouping and the residual grouping.  
Adjustments not resulting in an IU. If, after grouping,  
subgrouping, and netting, the amount in any grouping or  
subgrouping is a net negative or the calculation of the IU is  
zero or less than zero, then the adjustments in those net  
negative groups or in the calculation of the IU are  
adjustments that don’t result in an IU. Any adjustments  
that don’t result in an IU are taken into account by the  
reviewed year partners in accordance with Regulations  
section 301.6227-3.  
Figuring the Imputed Underpayment (IU)  
Definitions  
Reallocation grouping. In general, any adjustment that  
allocates or reallocates a PRI to and from a partner or  
partners is a reallocation adjustment, except for an  
adjustment to a credit or to a creditable expenditure. Each  
reallocation adjustment generally results in at least two  
separate adjustments, each of which becomes a separate  
subgrouping.  
Formula for Figuring the IU  
Credit grouping. Any adjustment to a PRI that is  
reported or could be reported by a partnership as a credit  
on the partnership’s return, including a reallocation  
adjustment to such PRI, is placed in the credit grouping.  
Creditable expenditure grouping. Any adjustment to a  
PRI where any person could take the item that is adjusted  
(or item as adjusted if the item wasn’t originally reported  
by the partnership) as a credit, including a reallocation  
adjustment to a creditable expenditure, is placed in the  
creditable expenditure grouping.  
Figuring the IU  
TNPA x rate* =  
+ Sum of net positive adjustments  
to creditable expenditure and  
credit groupings:  
= Total IU  
* Highest rate in effect for the reviewed year under section 1 or 11.  
Instructions for Form 1065-X (Rev. 08-2023)  
11  
 
The process of taking the adjustments shown on the  
AAR and inputting them into the formula above requires  
an understanding of the concepts of grouping,  
subgrouping, and netting. There are seven steps  
necessary in figuring an IU. The first three steps focus on  
grouping, subgrouping, and netting.  
for any different allocation of the creditable expenditure  
between partners. Two or more adjustments to creditable  
expenditures are included within the same subgrouping  
only if each adjustment relates to creditable expenditures  
in the same separate category, and each adjusted PRI  
would be allocated to the partners in the same ratio had  
those items been properly reflected on the originally filed  
partnership return.  
Steps in Figuring the IU  
Residual grouping. The residual grouping contains all  
adjustments that don’t fit into one of the other groups.  
Step 1—Grouping  
Recharacterization adjustments. A recharacterization  
adjustment will generally result in at least two separate  
adjustments within the residual grouping.  
Place each adjustment into one of four groupings:  
reallocation, credit, creditable expenditure, and residual  
groupings.  
Reallocation grouping. A reallocation adjustment  
generally consists of at least two adjustments, one  
positive and one negative, with each in a separate  
subgrouping.  
One adjustment reverses the improper characterization  
of the PRI.  
The other adjustment makes the proper  
characterization of the PRI.  
The adjustments that result from a recharacterization  
are placed into separate subgroupings.  
One part of the reallocation adjustment reverses the  
effect of the improper allocation of a PRI.  
The other part of the adjustment makes the proper  
Step 2—Subgrouping  
allocation of the PRI.  
Under the AAR rules, if one of the reallocation  
Determine if any adjustment, within one of the four  
groupings, needs to be subgrouped. Each adjustment is  
subgrouped according to how the adjustment would be  
required to be taken into account separately under section  
702(a). If any adjustment could be subject to any  
preference, limitation, or restriction under the Internal  
Revenue Code (or not allowed, in whole or in part, against  
ordinary income) if taken into account by any person, the  
adjustment is placed in a separate subgrouping from all  
other adjustments within the grouping.  
adjustments is negative, such negative adjustment must  
be pushed out to the proper partner(s).  
Don’t net reallocation adjustments. As each part  
of a reallocation adjustment is placed in a  
!
CAUTION  
separate subgrouping within the reallocation  
grouping, those adjustments can’t be netted in  
accordance with the netting rules.  
Example. $100 of ordinary income is being  
reallocated from Partner A to Partner B. For purposes of  
figuring the IU, there will be two adjustments, each in a  
separate subgrouping: a negative adjustment of $100  
(reversing improper allocation to Partner A) and a positive  
adjustment of $100 (making proper allocation to Partner  
B). These two adjustments can’t be netted. As a result, the  
total net positive adjustment in the reallocation grouping is  
$100 and will be included in the TNPA.  
Generally, each separate line item of Schedules K, K-1,  
K-2, and K-3 or return schedule (for example, Schedule L)  
represents a separate and distinct subgrouping.  
Example. Adjustments to ordinary income must be  
placed in a different subgrouping than capital gain income  
or interest income because each of those items is  
required to be separately stated under section 702(a).  
Credit grouping.  
Subgroupings generally reflect a line item from  
Generally, a decrease in credits is treated as a positive  
Schedules K, K-1, K-2, and K-3, including any  
adjustment, and an increase in credits is treated as a  
negative adjustment.  
subcategories of those lines (for example, alpha codes  
per the Schedule K-1 instructions or activities broken out  
via attached statements). If any line item on Schedules K  
and K-1 or other schedules consists of multiple items and  
the components are required to be taken into account  
separately under the Internal Revenue Code, regulations,  
forms, instructions, or other IRS guidance, then such line  
item must be further subgrouped.  
A reallocation adjustment relating to the credit grouping  
is placed into two separate subgroupings and won’t be  
netted together nor will they be netted with other credit  
adjustments.  
Creditable expenditure grouping.  
Generally, a decrease in creditable expenditures is  
treated as a positive adjustment to credits, and an  
increase in creditable expenditures is treated as a  
negative adjustment.  
Example. 2019 Schedule K-1, box 13, code A (cash  
contributions 60%), and box 13, code B (cash  
contributions 30%), are two separate subgroupings.  
A reallocation adjustment relating to a creditable  
The ordinary income (loss) amount reported on  
expenditure grouping is placed into two separate  
subgroupings and won’t be netted together.  
Schedule K, line 1, and in box 1 of Schedule K-1 is  
sourced from Form 1065, page 1, and is a net amount  
consisting of various page 1 line items of income and  
expenses. Although those separate page 1 line items are  
distinct items of income and expenses, if they are  
appropriately netted and included on Schedule K, line 1,  
and in box 1 of Schedule K-1, the net amount will be  
A creditable expenditure is treated in this manner even  
if the partners claimed a deduction in lieu of a credit.  
Each adjustment to a creditable expenditure is  
subgrouped based on the separate category of income to  
which the creditable expenditure relates and to account  
12  
Instructions for Form 1065-X (Rev. 08-2023)  
 
considered a single subgrouping, except when such  
amount is required to be separately allocated, such as  
when the partnership has more than one trade or  
business. If the partnership has more than one trade or  
business reported on Form 1065, page 1, the net income  
(loss) from each trade or business must be separately  
reported on Schedule K-1. Each separate activity will  
constitute a separate subgrouping and it must be  
determined which activity an adjustment to the page 1  
item of income and expense relates to for subgrouping  
purposes.  
excluded from the calculation of the TNPA because those  
adjustments don’t result in an IU.  
Note. If a positive adjustment to an item is reflected in  
positive adjustments to other items, the positive  
adjustment of equal or lesser magnitude that is reflected  
may be treated as zero solely for purposes of calculating  
any IU.  
Step 5—Determine the Highest Tax Rate in Effect  
Under Section 1 or 11 in the Reviewed Year  
If you have a negative adjustment along with a positive  
adjustment in the same line item of Schedules K and K-1,  
you must consider whether they may be properly netted at  
the partnership level and whether they are required to be  
taken into account separately by any partner. The  
adjustments may be subject to a limitation or preference  
under the Internal Revenue Code before you can place  
them in the same subgrouping (for example, passive and  
nonpassive activities).  
Step 6—Determine the Sum of Net Positive  
Adjustments to Creditable Expenditures and  
Credit Groupings That Will Increase the Product of  
the TNPA Multiplied by the Highest Rate in Effect  
A net decrease to creditable expenditures is treated as  
a net positive adjustment to credits and increases the  
product of the TNPA multiplied by the highest tax rate in  
effect. A net increase to creditable expenditures is treated  
as a net negative adjustment that is excluded from the  
calculation of the TNPA and is an adjustment that doesn't  
result in an IU.  
A negative adjustment that isn’t otherwise required to  
be placed in its own subgrouping must be placed in the  
same subgrouping as another adjustment if the negative  
adjustment and the other adjustment would have been  
properly netted at the partnership level and such netted  
amount would have been required to be allocated to the  
partners of the partnership as a single item for purposes  
of section 702(a) or other provision of the Internal  
Revenue Code and regulations.  
For the credit grouping, a net positive adjustment will  
increase the product of the TNPA multiplied by the highest  
tax rate in effect. A net negative adjustment, including net  
negative adjustments resulting from a credit reallocation  
adjustment, will be treated as an adjustment that doesn't  
result in an IU.  
Step 3—Netting  
Net all adjustments within each of the groupings and  
subgroupings.  
Step 7—Figure the IU Based on the Results of  
Steps 4 Through 6 and Insert Those Results Into  
the IU Formula  
Positive adjustments may be netted with other positive  
adjustments only if they are in the same grouping.  
Negative adjustments may be netted with other negative  
adjustments only if they are in the same grouping.  
Figuring the IU  
Positive and negative adjustments may only be netted  
TNPA x rate* =  
against each other if they are in the same subgrouping.  
+ Sum of net positive adjustments  
to creditable expenditure and  
credit groupings:  
An adjustment in one grouping or subgrouping may not  
be netted against an adjustment in any other grouping or  
subgrouping.  
= Total IU  
All adjustments within a subgrouping are netted to  
determine whether there is a net positive adjustment or  
net negative adjustment for that subgrouping.  
* Highest rate in effect for the reviewed year under section 1 or 11.  
Net positive adjustments from subgroupings or positive  
Partnership-Partner Amended Return Filed as  
Part of Modification  
adjustments within a grouping (if subgroupings are  
unnecessary) are netted to determine the net positive  
adjustment for that grouping. Net negative adjustments  
from sub groupings within a grouping are netted to  
determine the net negative adjustment for that grouping.  
Partnership-partners who are filing amended returns as  
part of the modification of the IU during examination under  
section 6225(c)(2) will report the applicable payment of  
tax on Part IV, line 1. The pass-through partner will  
compute the amount like an IU on the adjustments  
allocated to it and make the payment with the filing of  
Form 1065-X. A payment made with Form 1065-X should  
detail the portions that are for the payment of the IU, the  
interest, and the penalties. The partnership should  
consider all available guidance issued by the IRS when  
figuring the amount due. In general, the partnership  
should compute its amount due in accordance with the IU  
computation in these instructions. See Steps in Figuring  
the IU, earlier. The total of the IU, penalties, and interest  
should be reported on Part IV, line 2. When paying by  
Step 4—Figure the Total Netted Partnership  
Adjustments (TNPA)  
Each net positive adjustment in a grouping or  
subgrouping in the residual or reallocation grouping that  
results after netting the adjustments is included in the  
calculation of the TNPA.  
Each net negative adjustment in a grouping or  
subgrouping that results after netting the adjustments is  
Instructions for Form 1065-X (Rev. 08-2023)  
13  
 
check, include the name of the partnership-partner, “Form  
1065,the TIN of the partnership-partner, the tax year, and  
“Partner Payment for BBA Modification.Checks must be  
made payable to “United States Treasury” and included  
with the amended return. If making an electronic payment,  
choose the payment description “Partner Pymnt for BBA  
Modification” from the list of payment types. The payment  
amount, including interest and penalties, should be  
reported on Part IV, line 3.  
Paperwork Reduction Act Notice. We ask for the  
information on this form to carry out the Internal Revenue  
laws of the United States. You're required to give us the  
information. We need it to ensure that you're complying  
with these laws and to allow us to figure and collect the  
right amount of tax.  
You aren’t 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 information are  
Partnership-Partners Who Are Allocated  
Adjustments That Don’t Result in an IU  
If a partnership-partner is paying an amount due as part of  
an amended return submitted for purposes of  
modification, any adjustments that don’t result in an IU  
must be taken into account in the tax year that the amount  
is paid by the partnership-partner. However, if there are  
only adjustments that don’t result in an IU, those  
adjustments are subject to modification by the ultimate  
taxpayers who reported the original amounts and not by  
the partnership-partner itself. Refer to Regulations section  
301.6225-3 for further guidance.  
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.  
Part V—Explanation of Changes to  
Items in Part II and Part III  
If you have suggestions for making this form simpler,  
we would be happy to hear from you. You can send us  
comments through IRS.gov/FormComments. Or, you can  
write to: Internal Revenue Service, Tax Forms and  
Publications Division, 1111 Constitution Ave. NW,  
IR-6526, Washington, DC 20224. Don’t send Form  
1065-X to this address. Instead, see Where To File,  
earlier.  
For each amended item, explain in detail the reasons for  
the change. Include any computations necessary to  
support the amended item.  
Changes in allocations. If there is a change in the  
allocation of income, gain, loss, deduction, or credit to a  
partner, specify the nature and reasons for the changes.  
14  
Instructions for Form 1065-X (Rev. 08-2023)