After the changes highlighted in Expanded and new filing exceptions for Schedules K-2 and K-3 (Form 1065) beginning tax year 2024, the 2024 instructions for the Form 1065, Schedules K-2 and K-3 are updated as follows:
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2. U.S. citizen/resident alien partners
During tax year 2024, all the direct partners in the domestic partnership are (a) individuals that are U.S. citizens; (b) individuals that are resident aliens (as defined in section 7701(b)(1)(A) and the regulations thereunder); (c) domestic decedents’ estates (that is, decedents’ estates that aren't foreign estates as defined in section 7701(a)(31)(A)), with solely U.S. citizen and/or resident alien individual beneficiaries; (d) domestic grantor trusts (that is, trusts described under sections 671 through 678) that aren't foreign trusts as defined in section 7701(a)(31)(B)) and that have solely U.S. citizen and/or resident alien individual grantors and solely U.S. citizen and/or resident alien individual beneficiaries; (e) domestic non-grantor trusts (that is, trusts subject to tax under section 641 that aren't foreign trusts as defined in section 7701(a)(31)(B) with solely U.S. citizen and/or resident alien individual beneficiaries; (f) S corporations; (g) single-member limited liability companies (LLCs), where the LLC’s sole member is one of the persons in subparagraphs (a) through (f), and the LLC is disregarded as an entity separate from its owner (as defined in Regulations section 301.7701-3); or (h) domestic partnerships with direct partners who are any of the individuals or entities listed in (a) through (g).
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4. No 2024 Schedule K-3 requests by the 1-month date
The partnership doesn't receive a request from any partner for Schedule K-3 information on or before the 1-month date. The 1-month date is 1 month before the date the partnership files the Form 1065. For tax year 2024 calendar year partnerships, the latest 1-month date is August 15, 2025, if the partnership files an extension. A partner must request that the partnership provide subsequent year Schedule K-3 information specifically or must request such information on an annual basis.
Note. For partnerships that satisfy criteria 1 through 4, but receive a request after the 1-month date. If a partnership receives a request from a partner for Schedule K-3 information after the 1-month date for tax year 2024 and hasn't received a request from any other partner for Schedule K-3 information on or before the 1-month date, the domestic filing exception is met and the partnership isn't required to file the tax year 2024 Schedules K-2 and K-3 or furnish the tax year 2024 Schedule K-3 to the non-requesting partners. However, the partnership is required to provide the tax year 2024 Schedule K-3, completed with the requested information, to the requesting partner on the later of the date on which the partnership files Form 1065 or 1 month from the date on which the partnership receives the request from the partner. See Example 4, later.
Example 4—domestic filing exception met; Schedule K-3 issuance still required. The facts are the same as in Example 3, except that USP receives the request from Kirby on August 20, 2025. USP qualifies for the domestic filing exception because Kirby requested Schedule K-3 after the 1-month date.
USP isn't required to file the tax year 2024 Schedules K-2 and K-3 or furnish Schedule K-3 to the married couple. However, USP is required to provide Schedule K-3, completed with the requested information, to Kirby on September 20, 2025, the later of the date on which USP files Form 1065 or 1 month from August 20, 2025.
Note. If a partnership doesn't meet the domestic filing exception, it may meet the Form 1116 exemption exception to filing Schedules K-2 and K-3.
Small Partnership Filing Exception
Form 1065, Schedule B, Question 4 excepts a partnership from completing Schedules L, M-1, and M-2; item F on page 1 of Form 1065; or item L on Schedule K-1, if the partnership meets four conditions:
a. the partnership’s total receipts for the tax year were less than $250,000.
b. the partnership’s total assets at the end of the tax year were less than $1 million.
c. Schedules K-1 are filed with the return and furnished to the partners on or before the due date (including extensions) for the partnership return.
d. the partnership is not filing and is not required to file Schedule M-3.
A partnership is excepted from completing Schedules K-2 and K-3 if the partnership meets all four conditions of Question 4 of Schedule B. The partners must receive a notification from the partnership at the latest when the partnership furnishes the Schedule K-1 to the partner. The notice can be provided as an attachment to Schedule K-1. The notification must state that partners won't receive Schedule K-3 from the partnership unless the partners request the schedule.
If a partnership receives a request from any partner for Schedule K-3 information on or before the 1-month date, the partnership is required to file the tax year 2024 Schedules K-2 and K-3 and furnish the tax year 2024 Schedule K-3 to the requesting partner(s). The 1-month date is 1 month before the date the partnership files the Form 1065. For tax year 2024 calendar year partnerships, the latest 1-month date is August 15, 2025, if the partnership files an extension.
If a partnership receives a request from a partner for Schedule K-3 information after the 1-month date for tax year 2024 and hasn't received a request from any other partner for Schedule K-3 information on or before the 1-month date, the partnership isn't required to file the tax year 2024 Schedules K-2 and K-3 or furnish the tax year 2024 Schedule K-3 to the non-requesting partners. However, the partnership is required to provide the tax year 2024 Schedule K-3, completed with the requested information, to the requesting partner on the later of the date on which the partnership files Form 1065 or 1 month from the date on which the partnership receives the request from the partner.
Schedules K-2 and K-3 are required to be completed only for the parts and sections relevant to the requesting partner. For example, if a partner requests the information reported on Part III, Section 2, the partnership is required to complete and file Schedule K-2, Part III, Section 2, for the partnership’s total assets and Schedule K-3, Part III, Section 2, for the requesting partner’s distributive share of the assets. On the date that the partnership files Schedules K-2 and K-3, the partnership must provide a copy of the filed Schedule K-3 to the requesting partner. The partnership doesn't need to complete, attach, file, or furnish any other parts or sections of Schedules K-2 and K-3 to the IRS, the requesting partner, or any other partner.
If a partnership receives requests from partners for Schedule K-3 information both on or before the 1-month date and after the 1-month date, the partnership is required to file Schedules K-2 and K-3 as described in the prior paragraph only for the partner requests received on or before the 1-month date. For requests received after the 1-month date, the partnership is required to provide Schedule K-3, completed with that partner’s requested information, on the later of the date on which the partnership files Form 1065 or 1 month from the date on which the partnership receives the request from the partner.
A partner must request Schedule K-3 information for each year, unless the partner specifically requests to receive Schedule K-3 information for the 2024 tax year and all subsequent years (or if the partner specifically requested in a prior year to receive Schedule K-3 for each subsequent year).