resident maintains an office or other fixed place of business in a foreign country, income from the sale of personal property attributable to such office or other fixed place of business is foreign source only if an income tax of at least 10% of the income from the sale is actually paid to a foreign country with respect to such income. citizen or resident alien individual with a tax home (as defined in section 911(d)(3)) in a foreign country is treated as a nonresident with respect to the sale of personal property only if an income tax of at least 10% of the gain derived from the sale is actually paid to a foreign country with respect to that gain. For sourcing purposes, personal property sold by the partnership is treated as sold by the partners. In general, income from the sale of personal property is sourced according to the residence of the seller. If applicable, the partnership must also complete Schedule K-3, Part I, and include with the Schedule K-3 the attachment(s) as described below with the partner's distributive share of the amounts. If applicable, attach statements, as described below, to the Schedule K-2. Check the box to indicate whether any of the following international tax items are applicable in the tax year. This part is used to report information for international tax items not reported elsewhere on the Schedule K-2. Certain partners will use the information reported in the attachments with respect to boxes 1 through 5 and 10 to claim and figure a foreign tax credit on Form 1116 or 1118.Ĭertain partners will also use the information reported in the attachments with respect to box 6 to prepare their tax returns (Forms 1040, 1120, 1040-NR, and 1120-F, as applicable) by taking into account that under section 267A they are not allowed deductions for the amounts listed in the statement with respect to box 6.Ĭertain partners will use the information reported in attachments with respect to boxes 7 through 9 to identify any international tax information reporting forms or other international tax forms that may impact the partners’ tax returns.Ĭertain partners may use the information reported in attachments with respect to boxes 7 and 11 to determine any dual consolidated losses which may not be deducted on Form 1120.
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