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IRS relief on not reporting negative tax capital accounts on K-1

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March 2019


Treasury today released Notice 2019-20 (the Notice) providing penalty relief to partnerships filing Schedules K-1 to Form 1065 that fail to report information about partners’ negative tax basis capital accounts for the partnership’s tax year that began after December 31, 2017 but before January 1, 2019. The partnership must meet certain requirements to qualify for the relief, including providing the required information no later than 180 days after the six-month extended due date for the partnership’s Form 1065.

The takeaway

The Notice provides welcome relief to partnerships that may be unable to timely comply with the recent change. However, partnerships should take care to meet all requirements of the Notice in order to qualify for and take advantage of the penalty relief.

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Craig Gerson

Principal, M&A Tax, PwC US

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