CCH® ProSystem fx® Tax and CCH Axcess™ Tax: Frequently Asked Questions regarding Schedule K-2/K-3, Tax Year 2021.

  • Article Type:
  • Documentation
  • Last Modified:
  • 11/05/2022


Answer frequently-asked questions on K-2/K-3



  • CCH ProSystem fx Tax
  • CCH Axcess
  • CCH Axcess Tax
  • 1065
  • 1120S
  • Electronic filing
  • K-2
  • K-3


Sch K-2/K-3 Preparation 
'US' is not an available country code. Can I print 'US' as the Country Code on Schedule K-2 in CCH Axcess™ or CCH® ProSystem fx® Tax?Per IRS instructions, country code 'OC' is not allowed. Entering ‘OC’ will print ‘US’ in the US Source column. Click here for more information.
When will the K-1 import / export spreadsheet feature include Schedule K-2 / K-3 line items?This feature is currently available as of  release 2021.04014 / 2021-4.1.4. 
CCH® ProSystem fx® Tax CCH Axcess™ Tax    
Is it possible to be selective about which partners/shareholders receive a K-3? For example, if we have a partnership with only domestic activity but has one foreign partner, can the K-3 only be generated for the foreign partner and not the other domestic partners?Yes. To print only for selected partners, navigate to Partners > General Options > Schedule K-3 Print Options and change line 3 code ‘Code to produce the Schedule K-3’ to ‘Produce for only selected partners’ 

To then enable for select partners, navigate to Detail, then section 4, Other Payments / Printing Percentage Overrides / Other Options > Line 17, Produce the Schedule K-3. 

For Shareholders, go to General > return options > section 1 - Processing options > line 16 and select "Produce only for selected Shareholders"

To then enable for selected shareholders, navigate to Shareholders > Shareholder Information > Detail > section 2 - Options, line 6 select Yes.

Special Allocation is also available for most Schedule K-2 input fields using Ratio ID, allowing us to direct income and expenses only to partner(s) / shareholder(s) for which we intend to prepare Schedule K-3(s). If a partner / shareholder does not receive a portion of any Schedule K-2 item, then a Schedule K-3 will not be prepared for them.
Why does Schedule K-2, Part 2, Section 1 income input not flow to the government form for a country code?We can only report 3 country codes per sheet meaning the same three unique country codes will be displayed in rows A, B, and C on each sheet. Please see our KB article 141963 for more information.
Schedule K-3 Pg. 2, 4, 5, or 6, Part II, Section 1-2, columns (b), (c), (d), (f) are all populating the same and should be in only one source column in a 1065 return using CCH® ProSystem fx® Tax and CCH Axcess™ Tax?If using a ratio ID number to specially allocate a Schedule K-2, Part II, Income and / or Deduction entry by dollar amounts, be sure to check the box for Units and select Suppress Residuals in Special Allocations worksheet > Ratio Allocation (Interview Form K-5).
My partnership or S-Corporation client is required to prepare Schedule K-2 / K-3(s) and received a Schedule K-1 from a lower-tier partnership with no Schedule K-3. How can I know what amounts and country codes should be input for my client?The IRS Schedule K-2 and K-3 reports Gross Income amounts. For example, there is no line for Ordinary Income. If your client is required to prepare Schedule K-2 / K-3(s) and received a lower-tier Schedule K-1, then the preparer of the lower-tier partnership should have provided a Schedule K-3 along with that Schedule K-1. You may need to contact the preparer of the lower-tier partnership to obtain your client's correct share of Schedule K-3 data related to that K-1 received.
Schedule K-2/K-3 Electronic Filing 
When will electronic filing be available for returns preparing Schedule K-2 / K-3(s) with greater than 50 partners / shareholders?

Partnership - 1065 Schedule K-2/K-3 eFile, per CCH Software News, August 12, 2022:

  • As an update to the CCH ProSystem fx Tax 2021.04010 release on July 24th, 2022, the 250-partner limit for electronic filing Partnership returns has been increased to support up to 1,000 partners with the CCH ProSystem fx Tax 2021.04014 release available Friday August 12th. For Partnership returns that have more than 1,000 partners, please look for future communications from Wolters Kluwer.
The S Corporation - 1120S - Schedule K-2 / K-3 eFile schema is available for use by customers with release 2021.04010 / 2021-4.1, available July 24th, 2022.
  • There is no limit to the number of shareholders for electronic filing 1120S returns including Schedule K-2 and K-3(s).
Form 8865 available within 1065, 1120S, 1120, 990, 1040, and 1041 - The IRS has documented that they will not provide a schema XML including Schedule K-2 and K-3 for tax year 2021.
  • The limit of 50 partners will remain as our system will continue creating PDF attachments of Schedules K-2 and K-3. Returns preparing Form 8865 with Schedule K-2 and K-3 which have more than 50 partners will likely need to be paper filed.
For partnership returns with greater than 1000 partners preparing Schedule K-3, and ready to file, what can be done right now? Please contact 1-888-888-8370 when all efile diagnostics are cleared and your Federal return is ready to export for electronic filing.

During export of a return with more than 1000 partners preparing Schedule K-3, an error message will issue, stopping the upload with release 2021.04014 / 2021-4.1.4:
"The Federal return has been prevented from exporting, as it includes international information on Schedule K-3 and contains more than 1000 partners. Electronically filing a return of this size will slow down or possibly prevent the upload of this return and other returns attempting to upload at the same time. Please contact support at 1-888-888-8370 for additional assistance with processing this return."
For returns that have Schedule K-2 and K-3(s) prepared can we manually attach PDFs of the schedules and e-file? While the functionality to attach the PDFs manually is available, returns containing large PDF attachments along with Schedule K-2 and K-3(s) included in the IRS schema XML can place a substantial strain on the Electronic Filing Status System (ELF) and take longer to process, or potentially even prevent the filing of not just those returns but returns for other systems and users.
What is the maximum size allowed for a single PDF attachment?  The maximum size of an individual PDF attachment in any submission = 60 MB (uncompressed).

Can I suppress the auto generated PDFs within the return? 

Yes. General > Electronic Filing > General > Print Returns, Suppress autogenerated PDF for Schedule K-2 and K-3 (1065/1120S only).

Is there a code or specific naming convention to use when manually attaching K-2/K-3 forms? 

If manually attaching a PDF of these schedules, we would leave the PDF Code blank, and in the IRS Attachment Name field, follow IRS K-2/K-3 Naming conventions provided to CCH.

[CAUTION] CCH continues to advise against manually attaching PDFs of Schedule K-2 / K-3s with more than 50 partners / shareholders, per  known PDF attachment efile system limitations.

Will I have to manually attach 5471, 8621, 8858…etc. forms?

No; they are included in the existing electronic filing schema.  
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