Schedule P (Form 1040-NR): Foreign Partner’s Interests in Certain Partnerships Transferred During the Tax Year

Q: I have rental income—what’s the quick path?

Calculate on <a href="/calculator/schedule-E.html" title="Schedule E">Schedule E</a>; copy the net to this calculator.

Last reviewed: 2025-10-28

Use the Schedule P (Form 1040-NR) — Transfer of Partnership Interests by Foreign Partners (Tax Year 2026) Tax Form Calculator Schedule P (Form 1040-NR) — Transfer of Partnership Interests by Foreign Partners (Tax Year 2026) as a stand alone tax form calculator to quickly calculate specific amounts for your 2026 Schedule P state tax return. Alternatively, you can use one of our Combined Federal and State Tax Estimators to quickly calculate your salary, tax, and take-home pay.

Schedule P (Form 1040-NR) must be filed by a nonresident alien individual, a foreign estate, or a foreign trust when during tax year 2026 you transferred (sold, exchanged, or otherwise disposed of) an interest in a partnership that is either directly or indirectly engaged in a U.S. trade or business *or* holds U.S. real property interests. The form attaches to your Form 1040-NR.

Who must file: You must complete Schedule P if any of the following apply this year:
- You are a nonresident alien, foreign trust or foreign estate.
- You transferred an interest in a partnership that is engaged in a U.S. trade or business (under § 864(c)(8)).
- You transferred an interest in a partnership that holds a U.S. real property interest (per § 897(g)).
Key definitions:
- Transfer: Sale, exchange, distribution treated as a sale under § 707(a)(2)(B), or other disposition of a partnership interest.
- U.S. real property interest: Defined under § 897 and § 1.897-1.
- Effectively connected trade or business (ECTB): The partnership is engaged in a U.S. trade or business.
Attachments: Complete Schedule P (Form 1040-NR) and attach it to Form 1040-NR by the filing deadline for nonresident aliens.
Data sources: Use information received on Schedule K-3 (Form 1065) Part XIII, and any Form 8308 you received, to populate certain lines on Schedule P.

Schedule P: List of Foreign Partner Interests in Partnerships
(a) Name of partnership		(b) Address	(c) EIN	(d) For each partnership interest, is the foreign corporation’s distributive share ECI, or treated as ECI, in whole or in part, with a U.S. trade or business determined under section 875 (see instructions)?
A				Yes No
B				Yes No
C				Yes No
D				Yes No
		A	B	C	D	Total
1	Net income (loss) reported on lines 1 through 3, Schedule K-1
2	Gross income included on lines 1 through 3, Schedule K-1
3	Gross effectively connected income (ECI) on lines 1 through 3, Schedule K-
4	Non-interest expenses on lines 1 through 3, Schedule K-1
5	Non-interest expenses on lines 1 through 3, Schedule K-1, allocated to gross EC
6	Net income (loss) reported on Schedule K-1, other than on lines 1 through 3
7	Other gross income reported on Schedule K-1
8	Other gross ECI reported on Schedule K-1
9	Other non-interest expenses reported on Schedule K-1
10	Other non-interest expenses reported on Schedule K-1, allocated to gross ECI
11	Total gross income. Add lines 2 and 7
12	Total gross effectively connected income. Add lines 3 and 8
13	Interest expense on lines 1 through 3, Schedule K-1
14	Other interest expense reported on Schedule K-1, lines 13 and 18
15a	Total interest expense. Add lines 13 and 14
b	Interest expense directly allocable under Regulations section 1.882-5(a)(1) (ii)(B). (Note: Include the line 15b total on Schedule I, line 22.)
c	Subtract line 15b from line 15a. (Note: Enter the portion of the line 15c total that constitutes interest on U.S. booked liabilities on Schedule I, line 9, column (b).)
16	Partner’s liabilities included in outside basis under section 752 that give rise to directly allocable interest expense under Regulations section 1.882-5(a)(1)(ii)(B)
17a	Partner’s liabilities included in outside basis under section 752 that give rise to directly allocable interest expense under Regulations section 1.882-5(a)(1)(ii)(B)
b	All other liabilities included in partner’s outside basis under section 752
c	Add lines 17a and 17b
d	Subtract line 17c from line 16
18	Partner’s liabilities under Regulations section 1.884-1(d)(3)(vi). (Note: Enter the portion of the line 18 total on Schedule I, line 8, column (b) that represents U.S. booked liabilities under Regulations section 1.882-5(d).)
19	Partner’s outside basis under Regulations section 1.884-1(d)(3)(vi). Add lines 17d and 18
20	Partner’s outside basis allocable to ECI under Regulations section 1.884-1(d)(3)(i) and 1.882-5. (Note: The line 20 total should generally be entered on Schedule I, line 5, column (b). However, see the instructions for Schedule I, line 5, column (b) before entering an amount on that line.)
21	Enter “income” or “asset” to indicate the allocation method used on line 20 (see instructions)

Part I — Information on the transferred partnership interest: You must list each partnership, its EIN, your percentage and units transferred, date acquired, date transferred, and total proceeds. Up to four partnerships can be reported directly; if more, attach separate sheets in the same format.

Part II — Gain or loss computation: Calculate gain or loss on the transfer by using information from the partnership’s Schedule K-3 (Form 1065), part XIII, and if relevant Form 8308. Enter proceeds, subtract your basis, and reconcile amounts under §§ 864(c)(8) or 897(g).

Special rules and traps: • Part of the gain may be treated as effectively connected income even if the partner is a nonresident. • A transfer of a partnership holding U.S. real property interests may trigger FIRPTA § 897 consequences. • Failure to attach Schedule P when required may delay refund processing or increase audit risk.

Interaction with Form 1040-NR: The gain or loss from Schedule P flows into the relevant line on Form 1040-NR (typically page 1, line 17, or other “effectively connected” income lines—refer to the instructions).

Last reviewed: 2025-10-28: If you believe this form requires an update, please contact us.

Tips for Efficient Filing

Ensure you received and retained Schedule K-3 (Form 1065) from the partnership and any Form 8308. Without them you must ask the partnership for information or consult your records. Late information is a common source of error.

Maintain a spreadsheet of partnership interests held and transferred, acquisition and disposition dates, units held, and your basis—particularly if you held multiple partnerships. This facilitates future audits and supports the Schedule P calculations.

Best Practices & IRS Compliance Strategy

Coordinate your Schedule P filing with any U.S. estate or trust return if you are a foreign estate/trust partner. Because the partnership interest transfer may create filing obligations under both § 897 and § 864(c)(8), consider consulting international tax counsel.

Watch treaty implications: a tax treaty may affect whether the gain is subject to U.S. tax or qualifies for exclusion—but you must still file Schedule P and provide the disclosures. If a treaty claim is made, attach Form 8833.

Frequently Asked Questions

I have rental income—what’s the quick path?

Calculate on Schedule E; copy the net to this calculator.

Considering an IRS Offer in Compromise?

Read through Form 656-B to understand eligibility and steps.

Is my standard deduction included here?

Yes—federal standard deduction is applied by status; see the methodology table.

Is the monthly table exact?

It’s an even split for clarity; exact checks depend on your employer’s cycle and method.

How much would a 401(k) contribution change my net?

Model it with the 401(k) Calculator then rerun this page with your pre-tax amount.

Important Notes

All calculations are estimates for guidance only. Always review your return and consider professional advice when submitting official filings.