The K3's report how varieties of foreign income transactions is distributed as well how to figure the foreign tax credit from information on the K3. It was designed to replace, supplement, and clarify reporting of certain amounts formerly reported on Form 1065, Schedule K, line 20c, Other items and amounts, and Schedule K-1, Part III, line 20, Other information.
The new schedules assist partnerships in providing partners with the information necessary for the partners to complete their returns with respect to the international tax provisions of the Internal Revenue Code.
For example, the new Schedule K-3 provides information necessary for corporate and individual partners to figure their foreign tax credit on Form 1116, Foreign Tax Credit.
Please read these IRS instructions for reporting the K3 information. This will give you great appreciation of the hard work that entity level faces when preparing the K1's. Also look in Part 1 of the K3 for a list of your partnership share on the variety of items listed and checked.
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