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Form 8986: Partner's Share of Adjustment(s) to Partnership-Related Item(s) (Required Under Sections 6226 and 6227)
IRS Form 8986 is Partner's Share of Adjustment(s) to Partnership-Related Item(s), required under Sections 6226 and 6227. An audited partnership must furnish this form no later than 60 days after adjustments are finally determined.
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IRS Form 8986 - Partner's Share of Adjustment(s) to Partnership-Related Item(s) (Required Under Sections 6226 and 6227)
IRS Form 8986 is Partner's Share of Adjustment(s) to Partnership-Related Item(s), required under Sections 6226 and 6227. An audited partnership must furnish this form no later than 60 days after adjustments are finally determined.
Risk Radar
Scan points- 1Ensure the partnership name in Part II matches exactly what is on Form 8985.
- 2Failing to match the partnership name exactly between Part II and Form 8985.
- 3Not indicating the correct entity type in Part I, Item A when issuing the form.
- 4Submitting an audited partnership's package over 100 pages via fax instead of mailing it.
- 5Failing to include Forms 8986 with Form 8985 when submitting them to the IRS.
Plain English
This form tells partners how their share of a partnership's income, deductions, or credits has been changed during the year. It documents these changes when an audit occurs or when specific adjustments are made to the partnership's tax items. Partners use this information to correctly report their share on their own tax returns.
Submission Date
- Filing date: 2025-01-14 22:11:59
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when a BBA partnership needs to furnish and transmit each partner’s share of adjustments to partnership-related items.
- Do not use it when you are a pass-through partner that receives Form 8986 related to an audited partnership, unless you choose to furnish statements to your partners or have adjustments that do not result in an IU.
- Check Form 8985 instead when you are filing the transmittal report along with this form (or as part of it).
Form selector
Use this form or another form?
Audited BBA Partnership
This form is required to be filed electronically alongside Form 8986.
✓ Check before you continue
Pass-through partner of an AAR partnership
This form must be submitted by fax (or with) Form 8986 when filing with the IRS.
✓ Check before you continue
Other partners receiving adjustments
You must report the information from this form on Form 8978 and attach it to your reporting year tax return.
✓ Check before you continue
Deadline or filing window
For an audited partnership, the deadline is no later than 60 days after the adjustments are finally determined. An audited partnership can submit corrected Forms 8986 within 60 days of the original due date without permission. AAR partnerships must meet the extended due date of their adjustment year return.
Checklist
What you need before filling it out
AAR partnership status
Must have filed an administrative adjustment request (AAR) under section 6227. · Instructions p.1
Audited Partnership Status
Must have made the election under section 6226 to report partner adjustments. · Instructions p.1
Pass-through Partner Receiving Form 8986
The partner must either furnish this form to its own partners or pay an IU and submit Form 8985. · Instructions p.3
Other Partners Receiving Form 8986
Must report the information on Form 8978 and attach it to their reporting year tax return. · Instructions p.3
Submission Method (Audited/AAR)
Required electronic submission via IRS.gov/BBAeSubmit. · Instructions p.2
Payment for IU (Other Partners)
Payments can be made by EFTPS, debit or credit card, or Direct Pay (for Form 1040). · Instructions p.3
Before you submit
- 1Ensure you are filing as an Audited BBA Partnership or a Pass-through partner of one.
- 2If applicable, confirm your entity is an AAR partnership and has filed the required administrative adjustment request (AAR) under section 6227.
- 3Verify that Part V includes the changed column headings and the "as corrected" column.
- 4If you are a pass-through partner receiving this form, ensure you have chosen to furnish statements or calculated an IU/submitted Form 8985.
- 5If you are an 'Other Partner,' confirm you will report the data on Form 8978 and attach it.
- 6If paying in advance for an IU (for other partners), select "Prepayment on BBA AAR/Exam Push Out" as payment type.
- 7Confirm that any required accompanying forms (like Form 8985) are included or referenced.
How to file this form
- 1Complete the necessary sections of IRS Form 8986 based on your partnership status and adjustment details.
- 2If you are a pass-through partner, either furnish this form to your own partners (and submit it with Form 8985) or calculate/pay an IU and submit Form 8985.
- 3Submit the completed Forms 8985 and 8986 electronically via IRS.gov/BBAeSubmit if you are an Audited BBA Partnership or its pass-through partner.
- 4If you are a pass-through partner of an AAR partnership, submit Form 8985 (with or without Form 8986) by fax to 888-981-6982.
- 5If you are another type of partner, report the information on Form 8978 and attach it to your reporting year tax return before sending.
Known limitations
- 1An adjustment does not result in an imputed underpayment (IU) if netting with respect to any grouping or subgrouping that includes the particular partnership adjustment is zero or less than zero.
- 2Adjustments do not result in an IU if the calculation of the IU on those adjustments results in an amount that is zero or less than zero.
- 3Any adjustment to an item which is not a monetary item (for example, an election made by the partnership) is an adjustment that does not result in an IU.
Field map
Compact field-by-field guide
Entity Info
1 items
Name and taxpayer ID of the entity claiming the credit.
Credit Info
1 items
Type of credit or incentive being claimed.
Calculation
2 items
The base amount used to calculate the credit.
Calculated credit amount after applying formulas and limitations.
Certification
1 items
Detailed breakdown supporting the credit calculation.
Signatures
1 items
Sign and date the form.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is December 2024, and users can find the latest information regarding Form 8986 and its instructions at IRS.gov/Form8986. The column headings in Part V have been changed, and an "as corrected" column has been added.
What changed or needs a fresh check
- Edition date — confirm the revision date reads December 2024.
- Fee — Not stated in the official source.
- Mailing address — Not stated in the official source.
- Signature — Confirm that a signature is required (implied by instructions, but not explicitly listed).
- Form Number — confirm the form number reads 8986.
Quick Facts
Downloads
After you file
- 1Retain books or records relating to Form 8986 as long as their contents may become material in the administration of any Internal Revenue law.
- 2Generally, tax returns and return information are confidential, as required by section 6103.
- 3The time needed to complete and file this form varies depending on individual circumstances.
- 4If filing a Form 8986 for an AAR partnership that is electing to push out adjustments or has non-IU adjustments, the Forms 8985 and 8986 must be filed with, and in the same manner as, the AAR.
Sources
- SRCInstructions p.1 — Form 8986 is used by BBA partnerships to furnish and transmit each partner’s share of adjustments to partnership-related items.
- SRCInstructions p.1 — An 'Affected partner' is a partner that held an interest in a pass-through partner at any time during the tax year of the pass-through partner to which the adjustments relate.
- SRCInstructions p.2 — Audited partnerships and their pass-through partners are required to submit Forms 8985, Pass-Through Statement—Transmittal/Partnership Tracking Report, and 8986 electronically.
- SRCInstructions p.2 — AAR partnerships that elect to push out adjustments or have non-IU adjustments must include Form 8985 with their AAR along with Forms 8986.
- SRCInstructions p.2 — Pass-through partners of an AAR partnership must submit Form 8985 to the IRS by fax at 888-981-6982, with or without Forms 8986, as applicable.
- SRCInstructions p.2 — Form 8986 must be submitted along with (and in the same manner as) the AAR when filed by an AAR partnership.
- SRCInstructions p.5 — Example shows that on a Schedule K-3 (Form 1065), Part VIII, Line Entry B, Partner A's share of adjustments is reported.
- SRCInstructions p.7 — The estimated burden for business taxpayers filing Form 8986 is approved under OMB control number 1545-0123.
Common confusion points
Who needs to prepare Form 8986?
Audited partnerships that made an election under section 6226; direct or indirect pass-through partners receiving a form related to an audited partnership (if they choose to furnish statements); or partnerships filing an AAR under section 6227 (if they elect to push out adjustments or have non-IU adjustments).
→ Check the specific criteria listed in Section 6226/6227.
What is an 'Audited partnership' for Form 8986?
It is a BBA partnership that made the election under section 6226 to have its partners report their share of adjustments.
→ Confirm the partnership has elected under Section 6226.
When is an Audited partnership's adjustment year?
If the partnership filed a petition under section 6234, it is the year the court decision became final; otherwise, it is the year the final partnership adjustment (FPA) letter was mailed or the FPA waiver was executed by the IRS.
→ Verify whether a court petition was involved.
When must an AAR partnership file Form 8986?
When electing to push out adjustments to partners or when having adjustments that do not result in an imputed underpayment (IU).
→ Confirm if the election/adjustment type applies.
What is 'BBA'?
It stands for a BBA partnership, which is defined as a BBA partnership that has filed an administrative adjustment request (AAR) under section 6227.
→ Check the definition on Instructions p.1.
Does every partner who received Form 8986 need to file it?
Only affected partners must furnish and transmit their share of adjustments, though direct or indirect pass-through partners may choose to push out statements further.
→ Review if the partner is 'affected' by the adjustment.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 8805 (Foreign Partner's Information Statement of Section 1446 Withholding Tax) — Required for foreign partners when filing Forms 1042/1042-S or 8804/8805.
Questions about IRS Form 8986
What is IRS Form 8986 used for?
This form tells partners how their share of a partnership's income, deductions, or credits has been changed during the year. It documents these changes when an audit occurs or when specific adjustments are made to the partnership's tax items. Partners use this information to correctly report their share on their own tax returns.
Who must file IRS Form 8986?
An audited partnership must furnish Form 8986 to its partners, and direct/indirect pass-through partners must furnish it to their partners.
What information does IRS Form 8986 require?
The form collects details about the entity submitting it (Part I), the audited partnership or AAR filing (Part II), the partner receiving it (Part IV), and a detailed breakdown of items like income and deductions in Part V. Part VI contains specific statements regarding these adjustments.
When is IRS Form 8986 due?
Audited partnerships must submit Form 8986 no later than 60 days after the date on which partnership adjustments are finally determined. Pass-through partners must submit it by the extended due date of the audited or AAR partnership's adjustment year return.
Where do I file IRS Form 8986?
The form is submitted to the IRS along with Form 8985. For faxing, specific instructions apply: if the package exceeds 100 pages, it must be printed and mailed.
How do I complete IRS Form 8986?
First, complete Part I to identify the submitting entity. Next, fill out Parts II through V with specific financial data relating to the adjustment year. Finally, detail any necessary adjustments or corrections within Part VI before signing and submitting.
What happens if IRS Form 8986 is filed incorrectly?
Failure by an audited partnership to furnish and submit Forms 8986 by the due date may result in the audited partnership being liable for the IU (Internal Uncertainty penalty).
Who needs to prepare Form 8986?
Audited partnerships that made an election under section 6226; direct or indirect pass-through partners receiving a form related to an audited partnership (if they choose to furnish statements); or partnerships filing an AAR under section 6227 (if they elect to push out adjustments or have non-IU adjustments). Check the specific criteria listed in Section 6226/6227.
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