Enter investment expenses on line 20b. Investment expenses are deductible expenses (other than interest) directly connected with the production of investment income. See the Instructions for Form 4952 for more information.

Property subject to a net lease isn't treated as investment property because it is subject to the passive loss rules. Do not reduce investment income by losses from passive activities.

Investment income includes gross income from property held for investment, the excess of net gain attributable to the disposition of property held for investment over net capital gain from the disposition of property held for investment, any net capital gain from the disposition of property held for investment that each partner elects to include in investment income under section 163(d)(4)(B)(iii), and any qualified dividend income that the partner elects to include in investment income. Generally, investment income and investment expenses don't include any income or expenses from a passive activity. See Regulations section 1.469-2(f)(10) for exceptions.

Enter on line 20a the investment income included on lines 5, 6a, 7, and 11 of Schedule K. Do not include other portfolio gains or losses on this line.

If there are other items of investment income or expense included in the amounts that are required to be passed through separately to the partners on Schedule K-1, such as net short-term capital gain or loss, net long-term capital gain or loss, and other portfolio gains or losses, give each partner a statement identifying these amounts.

Report each partner's distributive share of amounts reported on lines 20a and 20b (investment income and expenses) in box 20 of Schedule K-1 using codes A and B, respectively.

Line 20c. Other Items and Amounts

Report the following information on a statement attached to Form 1065. On Schedule K-1, enter the appropriate code in box 20 for each information item followed by an asterisk in the left-hand column of the entry space (for example, "C*"). In the right-hand column, enter "STMT." The codes are provided for each information category.

Fuel tax credit information (code C). Report the number of gallons of each fuel sold or used during the tax year for a nontaxable use qualifying for the credit for taxes paid on fuel, type of use, and the applicable credit per gallon. See Form 4136, Credit for Federal Tax Paid on Fuels, for details.

Qualified rehabilitation expenditures (other than rental real estate) (code D). Enter total qualified rehabilitation expenditures from activities other than rental real estate activities. See the Instructions for Form 3468 for details on qualified rehabilitation expenditures. Note. Report qualified rehabilitation expenditures related to rental real estate activities on line 15c. Schedule K-1. Report each partner's distributive share of qualified rehabilitation expenditures related to activities other than rental real estate activities in box 20 of Schedule K-1 using code D. Attach a statement to Schedule K-1 that provides the information and the partner's distributive share of the amounts the partner will need to complete lines 11b through 11g of Form 3468. See the Instructions for Form 3468 for details. If the partnership has expenditures from more than one activity, identify on a statement attached to Schedule K-1 the amount for each separate activity. See Passive Activity Reporting Requirements, earlier.

Basis of energy property (code E). See the Instructions for Form 3468 for details on basis of energy property. In box 20 of Schedule K-1, enter code E followed by an asterisk and enter "STMT" in the entry space for the dollar amount. Attach a statement to Schedule K-1 that provides the information and the partner's distributive share of the amounts the partner will need to figure the amounts to report on lines 12a–12e, 12g, 12h, 12j, 12k, 12m, 12n, 12p, 12q, 12s, and 12u–12aa of Form 3468. See the Instructions for Form 3468 for details.

Recapture of low-income housing credit (codes F and G). If recapture of part or all of the low-income housing credit is required because (a) the prior year qualified basis of a building decreased, or (b) the partnership disposed of a building or part of its interest in a building, see Form 8611, Recapture of Low-Income Housing Credit. Complete lines 1 through 7 of Form 8611 to determine the amount of credit to recapture. Use code F on Schedule K-1 to report recapture of the low-income housing credit from a section 42(j)(5) partnership. Use code G to report recapture of any other low-income housing credit. See the instructions for lines 15a and 15b, earlier, for more information. If a partner's ownership interest in a building decreased because of a transaction at the partner level, the partnership must provide the necessary information to the partner to enable the partner to figure the recapture. The disposal of a building or an interest therein will generate a credit recapture unless it is reasonably expected that the building will continue to be operated as a qualified low-income building for the remainder of the building's compliance period. See Form 8586, Form 8611, and section 42 for more information.

Recapture of investment credit (code H). Complete and attach Form 4255, Recapture of Investment Credit, when investment credit property is disposed of, or it no longer qualifies for the credit, before the end of the recapture period or the useful life applicable to the property. State the type of property at the top of Form 4255, and complete lines 2, 3, 4, 10, and 11, whether or not any partner is subject to recapture of the credit. Attach to each Schedule K-1 a separate statement providing the information the partnership is required to show on Form 4255, but list only the partner's distributive share of the cost of the property subject to recapture. Also indicate the lines of Form 4255 on which the partners should report these amounts.

Recapture of other credits (code I). On an attached statement to Schedule K-1, provide any information partners will need to report recapture of credits (other than recapture of low-income housing and investment credit reported on Schedule K-1 using codes F, G, and H). Examples of credits reported using code I when subject to recapture include the following. The new markets credit. See Form 8874 and Form 8874-B, Notice of Recapture Event for New Markets Credit, for details.

The Indian employment credit. See section 45A(d) for details.

The credit for employer-provided childcare facilities and services. See section 45F(d).

The alternative motor vehicle credit. See section 30B(h)(8).

The alternative fuel vehicle refueling property credit. See section 30C(e)(5).

The qualified plug-in electric drive motor vehicles credit. See section 30D(f)(5).

Look-back interest—completed long-term contracts (code J). If the partnership is closely held (defined in section 460(b)(4)) and it entered into any long-term contracts after February 28, 1986, that are accounted for under either the percentage of completion-capitalized cost method or the percentage of completion method, it must attach a statement to Form 1065 showing the information required in items (a) and (b) of the instructions for lines 1 and 3 of Part II of Form 8697. It must also report the amounts for Part II, lines 1 and 3, to its partners. See the Instructions for Form 8697 for more information.

Look-back interest—income forecast method (code K). If the partnership is closely held (defined in section 460(b)(4)) and it depreciated certain property placed in service after September 13, 1995, under the income forecast method, it must attach to Form 1065 the information specified in the instructions for Form 8866, line 2, for the 3rd and 10th tax years beginning after the tax year the property was placed in service. It must also report the line 2 amounts to its partners. See the Instructions for Form 8866 for more details.

Dispositions of property with section 179 deductions (code L). This represents gain or loss on the sale, exchange, or other disposition of property for which a section 179 deduction has been passed through to partners. The partnership must provide all the following information related to such dispositions (see the instructions for line 6, earlier). Description of the property.

Date the property was acquired and placed in service.

Date of the sale or other disposition of the property.

The partner's share of the gross sales price or amount realized.

The partner's share of the cost or other basis plus expense of sale (reduced as explained in the instructions for Form 4797, line 21).

The partner's share of the depreciation allowed or allowable, determined as described in the instructions for Form 4797, line 22, but excluding the section 179 deduction.

The partner's share of the section 179 deduction (if any) passed through for the property and the partnership's tax year(s) in which the amount was passed through.

If the disposition is due to a casualty or theft, a statement indicating so, and any additional information needed by the partner.

For an installment sale, any information the partner needs to complete Form 6252. The partnership must also separately report the partner's share of all payments received for the property in future tax years. (Installment payments received for sales made in prior tax years should be reported in the same manner used in prior tax years.) See the instructions for Form 6252 for details.

Recapture of section 179 deduction (code M). This amount represents recapture of section 179 deduction if business use of the property dropped to 50% or less before the end of the recapture period. If the business use of any property (placed in service after 1986) for which a section 179 deduction was passed through to partners dropped to 50% or less (for a reason other than disposition), the partnership must provide all the following information. The partner's distributive share of the original basis and depreciation allowed or allowable (not including the section 179 deduction).

The partner's distributive share of the section 179 deduction (if any) passed through for the property and the partnership's tax year(s) in which the amount was passed through. See Regulations section 1.179-1(e) for details.

Interest expense for corporate partners (code N). Report as an information item each corporate partner's distributive share of the total amount of interest expense reported elsewhere on this return. A corporate partner's distributive share of interest income, interest expense, and partnership liabilities are treated as income, expense, and liabilities of the corporation for purposes of the limitation on the deduction for interest under section 163(j).

Section 453(l)(3) information (code O). Supply any information needed by a partner to figure the interest due under section 453(l)(3). If the partnership elected to report the dispositions of certain timeshares and residential lots on the installment method, each partner's tax liability must be increased by the partner's distributive share of the interest on tax attributable to the installment payments received during the tax year.

Section 453A(c) information (code P). Supply any information needed by a partner to figure the interest due under section 453A(c). If an obligation arising from the disposition of property to which section 453A applies is outstanding at the close of the year, each partner's tax liability must be increased by the tax due under section 453A(c) on the partner's distributive share of the tax deferred under the installment method.

Section 1260(b) information (code Q). Supply any information needed by a partner to figure the interest due under section 1260(b). If the partnership had gain from certain constructive ownership transactions, each partner's tax liability must be increased by the partner's distributive share of interest due on any deferral of gain recognition. See section 1260(b) for details, including how to figure the interest.

Interest allocable to production expenditures (code R). Supply any information needed by a partner to properly capitalize interest as required by section 263A(f). See Section 263A uniform capitalization rules, earlier, for more information.

CCF nonqualified withdrawal (code S). Report nonqualified withdrawals by the partnership from a capital construction fund to partners. See Pub. 595.

Depletion information—oil and gas (code T). Report gross income and other information relating to oil and gas well properties to partners to allow them to figure the depletion deduction for oil and gas well properties. Allocate to each partner a proportionate share of the adjusted basis of each partnership oil or gas property. See section 613A(c)(7)(D) for details. The partnership cannot deduct depletion on oil and gas wells. Each partner must determine the allowable amount to report on his or her return. See Pub. 535 for more information.

Unrelated business taxable income (code V). Report any information a partner that is a tax-exempt organization may need to figure its share of unrelated business taxable income under section 512(a)(1) (but excluding any modifications required by paragraphs (8) through (15) of section 512(b)). Partners are required to notify the partnership of their tax-exempt status. See Form 990-T, Exempt Organization Business Income Tax Return, and Pub. 598, Tax on Unrelated Business Income of Exempt Organizations, for more information.

Precontribution gain (loss) (code W). If the partnership distributed any section 704(c) property to any partner other than the contributing partner, and the date of the distribution was within 7 years of the date the section 704(c) property was contributed to the partnership, the distribution must be treated as if it were a sale by the contributing partner taking place on the date of the distribution. Section 704(c) property is property that had a FMV that was either greater or less than the contributing partner's adjusted basis at the time the property was contributed to the partnership. See Dispositions of Contributed Property, earlier, for more information. If the partnership made such a distribution during its tax year, attach a statement to the contributing partner's Schedule K-1 that provides the following information. The amount of the gain or loss that would have been allocated to the contributing partner if the partnership had sold the section 704(c) property at its FMV at the time of the distribution. See section 704(c)(1)(B) for details.

The character of the gain or loss that would have resulted if the partnership had sold the section 704(c) property to the distributee partner. Enter code W in box 20 of Schedule K-1 with an asterisk (W*) and enter "STMT," and attach the required statement.

Reserved for future use (code X).

Net investment income (code Y). Use code Y to report any information that may be relevant for partners to figure their net investment income tax when the information isn't otherwise identifiable elsewhere on Schedule K-1. Attach a statement that shows a description and dollar amount of each relevant item. Examples of items reported using code Y may include the following. Net rental real estate income reported on Form 1065, Schedule K, line 2, and other net rental income reported on Form 1065, Schedule K, line 3c, derived from a section 212 for-profit activity (and not from a section 162 trade or business).

Gains and losses from dispositions of assets attributable to a section 212 for-profit activity (and not from a section 162 trade or business).

Gain reported on the installment sale basis (or attributable to a private annuity) that is attributable to the disposition of property held in a trade or business.

Gain or loss from the disposition of a partnership interest, but only if such partnership was engaged, directly or indirectly, in one or more trades or businesses, and at least one of those trades or businesses wasn't trading in financial instruments or commodities.

The partner’s distributive share of interest income, or interest expense, which is attributable to a loan between the partnership and the partner (self-charged interest).

If the partnership received a Schedule K-1 (Form 1065), the detail and amounts reported to the partnership on code Y.

If the partnership received a Schedule K-1 (Form 1041), the amount of the adjustment reported.

Guaranteed payments (reported on Form 1065, Schedule K, line 4b) unrelated to services, such as for the use of capital or attributable to section 736(a)(2) payments for unrealized receivables or goodwill.

In the case of a common trust fund, any items of income or loss that may be taken into account in figuring the participant’s net investment income (other than qualified dividends, and short-term and long-term capital gains). In addition, Regulations section 1.1411-10 provides special rules for stock of controlled foreign corporations (CFCs) and passive foreign investment companies (PFICs) owned by the partnership. If the partnership owns directly or indirectly stock of a CFC or PFIC, then additional reporting may be required under code Y.

CFCs and QEFs. In the case of stock of CFCs and QEFs directly or indirectly owned by the partnership, the partnership must provide the name and EIN (if one has been issued) for each CFC and QEF the stock of which is owned by the partnership for which an election under Regulations section 1.1411-10(g) is not in effect and for which the partnership isn't engaged in a trade or business described in section 1411(c)(2). For each of these entities, the partnership must provide the following information on an entity-by-entity basis (to the extent such information isn't otherwise identifiable elsewhere on Schedule K-1). Section 951(a) inclusions.

Section 1293(a)(1)(A) inclusions.

Section 1293(a)(1)(B) inclusions.

Section 959(d) distributions subject to section 1411.

Section 1293(c) distributions subject to section 1411.

Amount of gain or loss derived from dispositions of the stock of CFCs and QEFs that is taken into account for section 1411 purposes.

Amounts that are derived from the disposition of the stock of CFCs and QEFs and included in income as a dividend under section 1248 for section 1411 purposes. In the case of stock of CFCs and QEFs directly or indirectly owned by the partnership for which an election under Regulations section 1.1411-10(g) is in effect, the partnership must provide the following information (to the extent such information isn't otherwise identifiable elsewhere on Schedule K-1) on either an aggregate basis or an entity-by-entity basis. Section 951(a) inclusions.

Section 1293(a)(1)(A) inclusions.

Section 1293(a)(1)(B) inclusions. In the case of stock of CFCs and QEFs directly or indirectly owned by the partnership with respect to which the partnership is engaged in a trade or business described in section 1411(c)(2), the partnership must provide the following information (to the extent such information isn't otherwise identifiable elsewhere on the Schedule K-1) on either an aggregate or an entity-by-entity basis, or may aggregate this information with other income derived by the partnership that is net investment income under section 1411(c)(1)(A)(ii). Section 951(a) inclusions.

Section 1293(a)(1)(A) inclusions.

Section 1293(a)(1)(B) inclusions.

Section 1296 Mark-to-market PFICs. In the case of stock of PFICs directly or indirectly owned by the partnership for which an election under section 1296 is in effect, the partnership must provide the following information (to the extent such information isn't otherwise identifiable elsewhere on Schedule K-1) on either an aggregate basis or an entity-by-entity basis (except as provided below). Amounts included in income under section 1296(a)(1).

Amounts deducted from income under section 1296(a)(2). In the case of PFIC stock owned directly or indirectly by the partnership for which an election under section 1296 is in effect and with respect to which the partnership is engaged in a trade or business described in section 1411(c)(2), the partnership may aggregate this information with other income derived by the partnership that is net investment income under section 1411(c)(1)(A)(ii).

Section 1291 funds. In the case of stock of PFICs directly or indirectly owned by the partnership with respect to which direct or indirect partners are subject to section 1291, the partnership must provide the following information (to the extent such information isn't otherwise identifiable elsewhere on Schedule K-1) on an entity-by-entity basis. Excess distributions made by a PFIC for which a partner is subject to section 1291.

Gains derived from the disposition of stock of a PFIC for which a partner is subject to section 1291.

Section 199A information (code Z). The qualified business income (QBI) deduction may be taken by eligible taxpayers, including individuals and some trusts and estates. The deduction is determined at the partner level. Partnerships are required to report information necessary for their partners to figure the deduction. Use code Z with an asterisk (Z*) on each partner’s Schedule K-1 and enter “STMT” in the entry space to indicate that the information is provided on an attached statement that separately identifies the partner’s distributive share of: Qualified items of income, gain, deduction, and loss; W-2 wages; Unadjusted basis immediately after acquisition (UBIA) of qualified property; Qualified publicly traded partnership (PTP) items; Section 199A dividends, also known as qualified real estate investment trust (REIT) dividends. The partnership must make an initial determination of which items are qualified items of income, gain, deduction, and loss at its level and report to each partner its distributive share of all items that may be qualified items at the partner level. These items must be separately stated where necessary for the partner to figure the deduction. See Determining the partnership’s QBI or qualified PTP items later. The partner must then determine whether each item is includible in QBI. In addition, the partnership must also report whether any of its trades or businesses are specified service trades or businesses (SSTBs) and identify on the statement any trades or businesses that are aggregated. The partnership must also report all QBI information reported to it by any entity in which the partnership has an ownership interest. Note. The partnership must report each partner’s share of qualified items of income, gain, deduction, and loss from a PTP so that partners can determine their qualified PTP income. However, the W-2 wages and UBIA of qualified property from the PTP should not be reported because partners cannot use that information in figuring their QBI deduction. Partnerships should use Statement A—QBI Pass-Through Entity Reporting, or a substantially similar statement, to report information for each partner’s distributive share from each trade or business, including QBI items, W-2 wages, UBIA of qualified property, qualified PTP items, and section 199A dividends by attaching the completed statement(s) to each partner’s Schedule K-1. The partnership should also use Statement A to report each partner’s distributive share of QBI items, W-2 wages, UBIA of qualified property, qualified PTP items, and section 199A dividends reported to the partnership by another entity. Partnerships should use Statement B—QBI Pass-Through Entity Aggregation Election(s), or a substantially similar statement, to report aggregated trades or businesses and provide supporting information to partners on each Schedule K-1. Partnerships should use Statement C—QBI Pass-Through Entity Reporting—Patrons of Specified Agricultural and Horticultural Cooperatives, or a substantially similar statement, to report the distributive share of QBI and W-2 wages allocable to qualified payments from a specified agricultural or horticultural cooperative for each trade or business. This statement should also be used to report each partner’s share of section 199A(g) deduction reported to the partnership by the specified cooperative. Determining the partnership’s qualified trades or businesses. The partnership’s qualified trades or businesses include its section 162 trades or businesses, except for SSTBs, or the trade or business of providing services as an employee. A section 162 trade or business generally includes any activity carried on to make a profit and with considerable, regular, and continuous activity. For more information on what qualifies as a trade or business for purposes of section 199A, see the instructions for Form 8995, Qualified Business Income Deduction Simplified Computation, or Form 8995-A, Qualified Business Income Deduction. Rental real estate. Rental real estate may constitute a trade or business for purposes of the QBI deduction if the rental real estate: Rises to the level of a trade or business under section 162,

Satisfies the requirements for the rental real estate safe harbor in Rev. Proc. 2019-38, or

Meets the self-rental exception (that is, the rental or licensing of property to a commonly controlled trade or business conducted by an individual or relevant pass-through entity) described in Regulations section 1.199A-1(b)(14). The determination of whether rental real estate constitutes a trade or business for purposes of the QBI deduction is made by the partnership. The partnership must first make this determination and then only include the distributive share of rental real estate items of income, gain, loss, and deduction from a trade or business on the statement provided to partners. Rental real estate that does not meet any of the three conditions noted above does not constitute a trade or business for purposes of the QBI deduction and must not be included in the QBI information provided to partners. Specified service trades or businesses (SSTBs) excluded from qualified trades or businesses. SSTBs are generally excluded from the definition of a qualified trade or business. An SSTB is any trade or business providing services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, investing and investment management, trading or dealing in securities, partnership interests, or commodities, or any other trade or business where the principal asset is the reputation or skill of one or more of its employees or owners. The term "any trade or business where the principal asset is the reputation or skill of one or more of its employees or owners" means any trade or business that consists of (i) a trade or business in which a person receives fees, compensation, or other income from endorsing products or services; (ii) a trade or business in which a person licenses or receives fees, compensation, or other income for the use of an individual’s image, likeness, name, signature, voice, trademark, or any other symbols associated with the individual’s identity; or (iii) receiving fees, compensation, or other income for appearing at an event or on radio, television, or another media format. Partnerships must separately report QBI information for all trades or businesses engaged in by the partnership, including SSTBs, but must identify which trades or businesses are SSTBs. Aggregation of trades or businesses. A partnership engaged in more than one trade or business may choose to aggregate multiple trades or businesses into a single trade or business for purposes of section 199A if it meets the following requirements. The same person, or group of persons, either directly or through attribution, owns 50% or more of each trade or business for a majority of the tax year, including the last day of the tax year, and all trades or businesses use the same tax year-end. None of the trades or businesses are an SSTB. The trades or businesses to be aggregated meet at least two of the following three factors. They provide products, property, or services that are the same or that are customarily offered together.

They share facilities or share significant centralized business elements, such as personnel, accounting, legal, manufacturing, purchasing, human resources, or information technology resources.

They are operated in coordination with, or reliance upon, one or more of the businesses in the aggregated group. If the partnership chooses to aggregate multiple trades or businesses, it must report the aggregation on Statement B, or a substantially similar statement, and attach it to each Schedule K-1. The statement must provide the information necessary to identify each separate trade or business included in each aggregation, a description of the aggregated trades or businesses, and an explanation of the factors met that allow the aggregation in accordance with Regulations section 1.199A-4. The aggregation statement must be completed each year to show the partnership's trade or business aggregations. Failure to disclose the aggregations may cause them to be disaggregated. The partnership's aggregations must be reported consistently for all subsequent years, unless there is a change in facts and circumstances that changes or disqualifies the aggregation. The partnership must provide a written explanation for any changes to prior year aggregations that describes the change in facts and circumstances. If the partnership directly or indirectly owns an interest in another relevant pass-through entity (RPE) that aggregates multiple trades or businesses, it must attach a copy of the RPE’s aggregation to each Schedule K-1. The partnership cannot break apart the aggregation of another RPE, but it may add trades or businesses to the aggregation, assuming the requirements above are satisfied. Determining the partnership’s QBI or qualified PTP items. The partnership’s items of QBI include qualified items of income, gain, deduction, and loss from the partnership’s trades or businesses that are effectively connected with the conduct of a trade or business within the United States. This may include, but is not limited to, items such as ordinary business income or losses, section 1231 gains or (losses), charitable contributions, section 179 deductions, and interest from debt-financed distributions. QBI may also include rental income/losses or royalty income, if the activity rises to the level of a trade or business; and gambling gains or losses, but only if the partnership is engaged in the trade or business of gambling. Whether an activity rises to the level of a trade or business must be determined at the entity level and, once made, is binding on partners. Qualified PTP items include the partnership’s share of qualified items of income, gain, deduction, and loss from an interest in a PTP and may also include gain or loss recognized on the disposition of the partner’s partnership interest that is not treated as a capital gain or loss. If the reporting partnership is itself a PTP, the PTP should report all qualified items of income, gain, deduction, and loss separately for each trade or business engaged in by the PTP. QBI and qualified PTP items don’t include the following. Items that aren’t properly includible in income.

Items that are treated as capital gain or loss under any provision of the Internal Revenue Code.

Dividends or dividend equivalents, including qualified REIT dividends.

Interest income (unless received in connection with the trade or business).

Wage income.

Income that is not effectively connected with the conduct of business within the United States (go to IRS.gov/ECI for more information).

Commodities transactions, or foreign currency gains or losses described in section 954(c)(1)(C) or (D).

Income, loss, or deductions from notional principal contracts under section 954(c)(1)(F).

Annuities (unless received in connection with the trade or business).

Guaranteed payments described in section 707(c) received by the entity for services rendered to a partnership.

Payments described in section 707(a) received by the entity for services rendered to a partnership. QBI flowchart. Partnerships may use this flowchart to determine if an item of income, gain, deduction, or loss is includible in QBI reportable to partners. Flowchart To Help Determine if Items Are Qualified Business Income Questions Yes No 1. Is the item effectively connected with the conduct of a trade or business within the United States? Continue to next question. Stop. This item is not QBI. 2. Is the item attributable to a trade or business (this may include section 1231 gain/(loss), charitable contributions, section 179 deductions, interest from debt-financed distributions, etc.)? Examples of an item not considered attributable to the trade or business at the entity level include gambling income/(loss) where the entity is not engaged in the trade or business of gambling, income/(loss) from vacation properties when the entity is not in that trade or business, activities not engaged in for profit, etc. Continue to next question. Stop. This item is not QBI. 3. Is the item treated as a capital gain or loss under any provision of the Internal Revenue Code or is it a dividend or dividend equivalent? Stop. This item is not QBI. Continue to next question. 4. Is the item interest income other than interest income properly allocable to a trade or business? (Note that interest income attributable to an investment of working capital, reserves, or similar accounts is not properly allocable to a trade or business.) Stop. This item is not QBI. Continue to next question. 5. Is the item an annuity, other than an annuity received in connection with the trade or business? Stop. This item is not QBI. Continue to next question. 6. Is the item gain or loss from a commodities transaction or foreign currency gain or loss described in section 954(c)(1)(C) or (D)? Stop. This item is not QBI. Continue to next question. 7. Is the item gain or loss from a notional principal contract under section 954(c)(1)(F)? Stop. This item is not QBI. Continue to next question. 8. Is the item of income or loss from a qualified publicly traded partnership? This item is a qualified PTP item. Report this item as qualified PTP income or loss, subject to partner-specific determinations, and check the PTP box. This item is QBI. Report this item as QBI subject to partner-specific determinations.

Specific instructions for Statement A—QBI Pass-Through Entity Reporting. QBI or qualified PTP items. The partnership (including PTPs) must first determine if it is engaged in one or more trades or businesses. It must then determine if any of its trades or businesses are SSTBs. It must also determine whether it has qualified PTP items from an interest in a PTP. It must indicate the status in the appropriate checkboxes for each trade or business (or aggregated trade or business) reported. Note. SSTBs and PTPs cannot be aggregated with any other trade or business. So, if the aggregation box is checked, the SSTB and PTP boxes for that specific aggregated trade or business should not be checked. Next, the partnership must report to each partner their distributive share of all items that are QBI or qualified PTP items for each trade or business the partnership owns directly or indirectly. Use the QBI flowchart above to determine if an item is reportable as a QBI item or qualified PTP item subject to partner-specific determinations. The descriptions on the statement generally match the descriptions reported on Schedule K-1. So, the amounts should reflect each trade’s or business’s portion of the qualified items of income, gain, deduction, or loss reported in the applicable box of the partner’s Schedule K-1. For example, the amount reported on the “Ordinary business income (loss)” line of this statement should reflect the attributable portion of qualified items of income, gain, deduction, and loss for each trade or business included in the “Ordinary business income (loss)” reported in box 1 of the partner’s Schedule K-1. Each item included under “Other income (loss)” and “Other deductions” must be stated separately, identifying the nature and amount of each item. W-2 wages and UBIA of qualified property. The partnership must determine the W-2 wages and UBIA of qualified property properly allocable to QBI for each qualified trade or business and report the distributive share to each partner on Statement A, or a substantially similar statement, attached to Schedule K-1. This includes the pro rata share of W-2 wages and UBIA of qualified property reported to the partnership from any qualified trades or businesses of an RPE the partnership owns directly or indirectly. However, partnerships that own a direct or indirect interest in a PTP may not include any amounts for W-2 wages or UBIA of qualified property from the PTP, as the W-2 wages and UBIA of qualified property from a PTP are not allowed in figuring the W-2 wage and UBIA limitations. The W-2 wages are amounts paid to employees described in sections 6051(a)(3) and (8). If the partnership conducts more than one trade or business, it must allocate the W-2 wages among its trades or businesses. See Rev. Proc. 2019-11, 2019-09 I.R.B. 742, for more information. The unadjusted basis of qualified property is figured by adding the unadjusted basis of all qualified assets immediately after acquisition. Qualified property includes all tangible property subject to depreciation under section 167, for which the depreciable period hasn’t ended, that is held and used by the trade or business during the tax year and held on the last day of the tax year. The depreciable period ends on the later of 10 years after the property is placed in service or the last day of the full year for the applicable recovery period under section 168. Section 199A dividends. The partnership must report the distributive share of any section 199A dividends, also known as qualified real estate investment trust (REIT) dividends, to each partner on Statement A, or a substantially similar statement, attached to Schedule K-1. Section 199A dividends do not have to be separately reported by trades or businesses and can be reported as a single amount to partners. Section 199A dividends include any dividend the partnership receives from a REIT held for more than 45 days, for which the payment is not obligated to someone else, is not a capital gain dividend under section 857(b)(3), and is not a qualified dividend under section 1(h)(11), plus any qualified REIT dividends received from a RIC. Fiscal year partnerships. For purposes of determining the QBI or qualified PTP items, UBIA of qualified property, and the aggregate amount of qualified section 199A dividends, fiscal year-end partnerships include all items from the tax (fiscal) year. For purposes of determining W-2 wages, fiscal year-end partnerships include amounts paid to employees under sections 6051(a)(3) and (8) for the calendar year ended with or within the partnership’s tax year. If the partnership conducts more than one trade or business, it must allocate W-2 wages among its trades or businesses. See Rev. Proc. 2019-11 for more information. Statement A—QBI Pass-Through Entity Reporting Partnership’s name: Partnership’s EIN: Partner’s name: Partner’s identifying number: Partner’s share of: Trade or Business 1 Trade or Business 2 Trade or Business 3 ❑ PTP

❑ Aggregated

❑ SSTB ❑ PTP

❑ Aggregated

❑ SSTB ❑ PTP

❑ Aggregated

❑ SSTB QBI or qualified PTP items subject to partner-specific determinations: Ordinary business income (loss) Rental income (loss) Royalty income (loss) Section 1231 gain (loss) Other income (loss) Section 179 deduction Charitable contributions Other deductions W-2 wages UBIA of qualified property Section 199A dividends

Specific instructions for Statement B—QBI Pass-Through Entity Aggregation Election(s). If the partnership elects to aggregate more than one trade or business that meets all the requirements to aggregate, the partnership must report the aggregation to partners on Statement B, or a substantially similar statement, and attach it to each Schedule K-1. The partnership must indicate trades or businesses that were aggregated by checking the appropriate box on Statement A for each aggregated trade or business. The partnership must also provide a description of the aggregated trade or business and an explanation of the factors met that allow the aggregation. The aggregation statement must be completed each year to show the partnership’s trade or business aggregations. Failure to disclose the aggregations may cause them to be disaggregated. The partnership’s aggregations must be reported consistently for all subsequent years, unless there is a change in facts and circumstances that changes or disqualifies the aggregation. The partnership must provide a written explanation for any changes to prior year aggregations that describes the change in facts and circumstances. If the partnership holds a direct or indirect interest in an RPE that aggregates multiple trades or businesses, the partnership must also include a copy of the RPE’s aggregations with each partner’s Schedule K-1. The partnership cannot break apart the aggregation of another RPE, but it may add trades or businesses to the aggregation, assuming the aggregation requirements are satisfied. Statement B—QBI Pass-Through Entity Aggregation Election(s) Partnership’s name: Partnership’s EIN: Trade or business aggregation 1* Provide a description of the aggregated trades or businesses and an explanation of the factors met that allow the aggregation in accordance with Regulations section 1.199A-4. In addition, if the partnership holds a direct or indirect interest in a relevant pass-through entity (RPE) that aggregates multiple trades or businesses, attach a copy of the RPE's aggregations. _____ _____ _____ _____ Has this trade or business aggregation changed from the prior year? This includes changes in the aggregation due to a trade or business being formed, acquired, or disposed of, or having ceased operations. If yes, explain. _____ _____ * If the partnership has more than one aggregated group, attach additional Statements B. Name the additional aggregations 2, 3, 4, etc.

Specific instructions for Statement C—QBI Pass-Through Entity Reporting—Patrons of Specified Agricultural and Horticultural Cooperatives. QBI items and W-2 wages allocable to qualified payments. If the partnership is a patron of a specified agricultural or horticultural cooperative, the partnership must provide the share of QBI items and W-2 wages allocable to qualified payments from each trade or business to each of its partners on Statement C, or a substantially similar statement, and attach it to each Schedule K-1 so each partner can figure their patron reduction under section 199A(b)(7). QBI items and W-2 wages allocable to qualified payments include QBI items included on Statement A that are allocable to the qualified payments reported to the partnership on Form 1099-PATR from the cooperative. Section 199A(g) deduction. The partnership must report to its partners their share of any section 199A(g) deduction passed through from the cooperative, as reported on Form 1099-PATR. Section 199A(g) deductions do not have to be reported separately by trades or businesses and can be reported as a single amount to partners. Statement C—QBI Pass-Through Entity Reporting—Patrons of Specified Agricultural and Horticultural Cooperatives Pass-through entity’s name: Pass-through entity’s EIN: Partner’s name: Partner’s identifying number: Partner’s share of: Trade or Business Trade or Business Trade or Business ❑ PTP

❑ Aggregated

❑ SSTB ❑ PTP

❑ Aggregated

❑ SSTB ❑ PTP

❑ Aggregated

❑ SSTB QBI items allocable to qualified payments subject to partner-specific determinations: Ordinary business income (loss) Rental income (loss) Royalty income (loss) Section 1231 gain (loss) Other income (loss) Section 179 deduction Charitable contributions Other deductions W-2 wages allocable to qualified payments Section 199A(g) deduction

Section 704(c) information (code AA). For partnerships other than publicly traded partnerships, if a partner’s taxable income or loss on any line item on Schedule K-1 (Form 1065) includes an allocation of any income or deduction item determined by applying section 704(c), include the sum of such income and deduction items here. Example 1—Single section 704(c) allocation. Partnership P has two partners, A and B. A and B share all items of income, loss, and deduction equally, except for items required to be allocated under section 704(c). A contributes property X with a FMV of $100 and a tax basis of $60. X is depreciable over 10 years. B contributes $100. The traditional method is used to allocate section 704(c) items pertaining to X. In the first year, the partnership has $10 of section 704(b) book depreciation, which is allocated equally to A and B for book purposes ($5 each). However, P only has $6 of tax depreciation. The partnership has no other income or deductions during the tax year. Under the traditional method, P allocates $1 to A and $5 to B for tax purposes. Assuming this is the only item where taxable income is affected by section 704(c) allocations during the current year, the partnership would report deductions on Schedule K-1, Line 20, code AA of $1 for A and $5 for B. Example 2—Multiple section 704(c) allocations. The facts are the same as in Example 1, except in addition to the facts in that example, A also contributes property Y with a FMV of $100 and a remaining tax basis of $0. If Y were newly placed in service, its depreciable life would be 10 years straight line. The partnership adopts the remedial method with respect to property Y. In the first year, P has $10 of section 704(b) book depreciation, which is allocated equally to A and B for book purposes ($5 each). However, P has $0 of tax depreciation with respect to property Y. Under the remedial method, for tax purposes, P allocates $5 of remedial income to A and $5 of a remedial depreciation deduction to B with respect to property Y. In this case, the partnership would report on Schedule K-1, Line 20, Code AA that A has $4 of taxable income, determined by applying section 704(c) ($1 of depreciation deductions from property X and $5 of remedial income from property Y) and that B has $10 of deductions for tax purposes, determined by applying section 704(c) (consisting of $5 depreciation from property X and $5 remedial depreciation from property Y).

Required reporting for the sale or exchange of an interest in a partnership (codes AB, AC, and AD). When a sale or exchange of a partnership interest occurs and the partnership holds section 751 property such as unrealized receivables defined in section 751(c), property subject to unrecaptured section 1250 gain, inventory items defined in section 751(d), or collectibles, the partnership must report to the transferor partner their share of the gain or loss figured for the following categories of assets. Section 751 gain (loss) (code AB). Section 751 "hot assets" (unrealized receivables and inventory items). Section 1(h)(5) gain (loss) (code AC). Section 1(h)(5) collectible assets. Deemed section 1250 unrecaptured gain (code AD). Section 1(h)(6) unrecaptured section 1250 gain assets (depreciable real property) are section 751 property per Regulations section 1.751-1(c)(4)(v).

Excess taxable income (code AE). If the partnership is required to file Form 8990, it may determine it has excess taxable income. If so, enter the amount from Form 8990, Part II, line 36, for excess taxable income. Schedule K-1. Enter the partner’s amount of excess taxable income. The partner will enter the amount on Form 8990, Schedule A, line 43(f), if the partner is required to file Form 8990.

Excess business interest income (code AF). If the partnership is required to file Form 8990, it may determine it has excess business interest income. If so, enter the amount from Form 8990, Part II, line 37, for excess business interest income. Schedule K-1. Enter the partner’s amount of excess business interest income. The partner will enter the amount on Form 8990, Schedule A, line 43(g), if the partner is required to file Form 8990.

Gross receipts for section 59A(e) (code AG). Provide the partner's share of gross receipts. If the partner is a foreign person, only gross receipts effectively connected with the conduct of a trade or business within the United States shall be taken into account.