On 3 November, the IRS released reporting guidance in the form of FAQs for partnership interests held in connection with the performance of services (i.e., Section 1061). The FAQs contain sample worksheets (the Worksheets) for passthrough entities (hereinafter referred to as partnerships) to attach to each investor’s Schedule K-1 (Worksheet A) and for individual taxpayers (Owner Taxpayers) to use for purposes of preparing Form 1040s (Worksheet B and Tables 1 and 2).
Below are some initial observations regarding the FAQs, with a particular focus on Worksheet A, which is provided by the partnership to its partners holding applicable partnership interests (APIs).
