No, the partnership or S corporation is not required to complete all parts of Schedules K-2 and K-3. They are only required to complete the relevant portions of Schedules K-2 and K-3.
The instructions for Schedules K-2 and K-3 specify that a partnership or S corporation must complete the relevant parts of these schedules based on the specific international tax items that are applicable to their operations. For example, if the partnership or S corporation does not own an interest in a foreign corporation, it is not required to complete the parts of Schedules K-2 and K-3 that pertain to foreign corporations. Similarly, if there are no foreign taxes paid or accrued, the sections related to foreign tax credits would not need to be completed.
The IRS instructions provide detailed guidance on which parts and sections of Schedules K-2 and K-3 need to be completed based on the specific circumstances and international tax relevance of the partnership or S corporation. Therefore, the entity should carefully review the instructions to determine which parts are applicable to their situation and complete only those relevant sections.
Sources:
Instructions for Form 1065 (2023)
Instructions for Form 1120-S (2023)
S Corporation Instructions for Schedules K-2 and K-3 (Form 1120-S) (2023)
Partnership Instructions for Schedules K-2 and K-3 (Form 1065) (2023)
S Corps Also Get Filing Exception for Schedules K-2 and K-3
