Instructions for Filling Out Form 8978

This document offers guidance on completing Form 8978, used by partners to report adjustments shown on Forms 8986 received from partnerships. It covers the form's purpose, filing requirements, and a step-by-step guide on filling it out, including Schedule A.

In this article, we'll provide information on Form 8978 and a step-by-step guide on how to fill it out.

What is Form 8978?

Form 8978 is used by partners, excluding pass-through partners, to report adjustments shown on Forms 8986 received from partnerships that have elected to push out adjustments to partnership-related items to their partners. Every partner that receives a Form 8986 must file Form 8978 to report any additional reporting year tax as a result of taking into account the partner's share of the reviewed year(s) adjustments.

The form has several sections, including Part I for computing the additional reporting year tax. Partners need to enter the appropriate adjustments from Form 8986 on Schedule A and calculate the total adjustments for income, deductions, and credits. The corrected income tax liability and additional reporting year tax are calculated based on the adjustments made.

Who Must File Form 8978?

Every partner, excluding pass-through partners, who receives a Form 8986 from a pass-through entity must file Form 8978. This form is used to report any additional reporting year tax as a result of taking into account the partner's share of the reviewed year(s) adjustments.

Form 8978 Tax Filing Deadlines and Due Dates

• The due date for filing Form 8978 depends on the partner's individual circumstances.
• Form 8978 should be filed with a federal income tax return for the partner's reporting year.
• Specific due dates are not provided on the instructions page.

Form 8978 Late Payment Penalty

Although there’s not a specific late payment penalty amount for Form 8978. It is essential to consult with a tax professional or the IRS for information on potential penalties related to late payments.

Step-by-Step Instructions for Form 8978

Here are the step-by-step instructions for filling out Form 8978:

1. Begin by identifying the partner's name and taxpayer identification number at the top of the form.
2. In Part I, compute the additional reporting year tax by following these steps:
3. On line 1, enter the total adjustments for income, deductions, and credits from Schedule A, Part I, line 5.
4. On line 2, enter the total adjustments for income tax liability from Schedule A, Part II, line 11.
5. On line 3, subtract line 2 from line 1 to calculate the corrected income tax liability.
6. On line 4, enter the partner's income tax liability as originally reported or as previously adjusted.
7. On line 5, subtract line 4 from line 3 to calculate the additional reporting year tax.
8. Complete Schedule A, which is used to report the partner's share of adjustments to partnership-related items:
9. In Part I, report the adjustments to income, deductions, and credits:
10. On lines 1a through 1c, enter the adjustments to income.
11. On lines 2a through 2c, enter the adjustments to deductions.
12. On lines 3a through 3c, enter the adjustments to credits.
13. On line 4, enter the total adjustments to income, deductions, and credits from lines 1a through 3c.
14. On line 5, enter the total adjustments for income, deductions, and credits from line 4.
15. In Part II, report the adjustments to income tax liability:
16. On lines 6a through 6c, enter the adjustments to tax rates.
17. On lines 7a through 7c, enter the adjustments to tax credits.
18. On lines 8a through 8c, enter the adjustments to other taxes.
19. On line 9, enter the total adjustments to income tax liability from lines 6a through 8c.
20. On line 10, enter the total adjustments for income tax liability from line 9.
21. On line 11, enter the total adjustments for income tax liability from line 10.
22. After completing Form 8978 and Schedule A, report the additional reporting year tax on the partner's income tax return as instructed in the form's instructions.

How to Submit Form 8978

To submit Form 8978, simply complete the form and attach it to your federal income tax return for the reporting year. Ensure that you follow the specific instructions provided for each section of the form and report the additional reporting year tax on your income tax return as instructed.

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