Updated October 16, 2026. Quick answer: Box 16 of Schedule K-1 (Form 1065) is a checkbox that tells a partner whether Schedule K-3 is attached. When it is checked, the K-3 carries the items of international tax relevance. When it is not, the partner has been told the K-3 will not come unless the partner asks for it.
What box 16 reports
On the form, line 16 of Part III reads “Schedule K-3 is attached if checked”. It holds no dollar amount. The instructions give the checked case first: “If the partnership checked the box, see the attached Schedule K-3 with respect to items of international tax relevance.” For everything else on the K-1, see the Schedule K-1 (Form 1065) boxes overview.
Box 16 is a pointer to a second schedule, and the partner-level instructions for that schedule are a separate document: “For additional information, see the Partner’s Instructions for Schedule K-3.”
When the box is not checked
The instructions describe the notice a partner should hold when the box is not checked. “If the partnership didn’t check the box, the partnership attached a statement to the Schedule K-1 (or issued a statement prior to furnishing the Schedule K-1) notifying the partner that the partner won’t receive Schedule K-3 from the partnership unless the partner requests the schedule.”
Whether to request the schedule is the partner’s call. The next sections list the places in the K-1 instructions that send a partner to it.
Where the K-1 instructions send you to Schedule K-3
The instructions repeat the same pointer in several boxes. The table lists the ones that relate to foreign items.
| Where it appears | As printed |
|---|---|
| Boxes 6a and 6b, dividends | “Use Schedule K-3, Part V, to determine your share of distributions by foreign corporations to the partnership that are attributable to PTEP in your annual PTEP accounts with respect to the foreign corporations.” |
| Box 6b, qualified dividends | “If you have any foreign source qualified dividends, see the Partner’s Instructions for Schedule K-3 for additional information.” |
| Box 9a, long-term capital gain | “If you have any foreign source net long-term capital gain (loss), see the Partner’s Instructions for Schedule K-3 for additional information.” |
| Box 9b, collectibles gain | “If you have any foreign source collectibles (28%) gain (loss), see the Partner’s Instructions for Schedule K-3 for additional information.” |
| Box 9c, unrecaptured section 1250 gain | “If you have any foreign source unrecaptured section 1250 gain, see the Partner’s Instructions for Schedule K-3 for additional information.” |
| Box 10, section 1231 gain | “If you have any foreign source net section 1231 gain (loss), see the Partner’s Instructions for Schedule K-3 for additional information.” |
Foreign taxes and Form 1116
Box 21 holds foreign taxes paid or accrued, and its instruction is short. “Foreign taxes paid or accrued reduce a partner’s basis and are limited to basis.” “Don’t use this amount to complete your Form 1116, Foreign Tax Credit; or Form 1118, Foreign Tax Credit”. The same sentence names the replacement: “See Schedule K-3 to complete your Form 1116 or 1118.” The credit form is covered on the Form 1116 page.
The foreign tax credit election is a partner-level choice. Among the elections made by the partner rather than by the partnership, the instructions list “Section 901 (foreign tax credit). See Schedule K-3.”.
Basis, controlled foreign corporations and PTEP
Foreign items can move a partner’s basis in both directions, and the K-3 is where the data sits. On the increase side: “Your adjusted basis may be increased under section 961(a) for amounts that you’re required to include in income with respect to a controlled foreign corporation (CFC)”. The pointer follows: “See the Partner’s Instructions for Schedule K-3 for more information on sections 951(a) and 951A inclusions.”
On the decrease side the instructions describe previously taxed earnings and profits. “Your adjusted basis may be decreased under section 961(b)(1)”. And for basis generally, “a partner’s share of the adjusted basis in partnership charitable contributions (defined in section 170(c)) and taxes, described in section 901, paid or accrued to foreign countries and to U.S. territories is subject to this basis limitation (defined in section 704(d)).”
Sales of a partnership interest and net investment income
Box 20 has two items that pair with the K-3. Code AB covers a sale of a partnership interest by a foreign transferor. “For foreign transferors, the information for code AB must also have been reported to you on Schedule K-3, Part XIII.” For net investment income tax, the instructions add: “Code Y is used to report information not provided elsewhere on Schedule K-3 (or an attachment) regarding income from CFCs and passive foreign investment companies (PFICs) the stock of which is owned by the partnership.” The tax form is covered on the Form 8960 page.
Which revision applies
The edition read for this page is the 2025 Partner’s Instructions for Schedule K-1 (Form 1065) and the 2025 Schedule K-1 (Form 1065) itself, which are the revisions irs.gov served when they were read on 2026-10-16. Check the revision printed on the Schedule K-1 you received and the matching instructions, because a later edition can change the box layout, the code letters and the reporting lines.
Common mistakes
- Reading an unchecked box 16 as proof there is nothing foreign on the K-1. The instructions say a partner who gets no Schedule K-3 was notified that it will not come unless the partner requests the schedule.
- Using the box 21 amount on Form 1116. The instructions say not to use it to complete Form 1116 or Form 1118 and to use Schedule K-3 instead.
- Treating foreign taxes as free of the basis rules. The instructions say foreign taxes paid or accrued reduce a partner’s basis and are limited to basis.
Related: Schedule K-1 (Form 1065) boxes explained, Form 1116 foreign tax credit, Form 8960 net investment income tax, net investment income tax, and Schedule D (Form 1040).
Sources
- 2025 Partner’s Instructions for Schedule K-1 (Form 1065): https://www.irs.gov/pub/irs-pdf/i1065sk1.pdf
- Schedule K-1 (Form 1065) (2025), Partner’s Share of Income, Deductions, Credits, etc.: https://www.irs.gov/pub/irs-pdf/f1065sk1.pdf
Read from the IRS documents linked above on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.