8978

Partner's Additional Reporting Year Tax

Agency
IRS
Revision
Rev. January 2023
Fillable fields
91
Pages
1
Official source
IRS form page
Checked
October 21, 2026
Fill 8978 online
Page 1 of form 8978

Form 8978: Partner's Additional Reporting Year Tax

Form 8978, Partner's Additional Reporting Year Tax, is used by partners other than pass-through partners (such as partnerships or S corporations) to report adjustments shown on Forms 8986 they received from partnerships that elected to push out adjustments to partnership-related items to their partners. The IRS About page says these partners use it to re-figure their tax liabilities for the affected years and any intervening years, up to the adjustment year.

The form works with Schedule A (Form 8978), which lists each adjustment. Part I carries the Schedule A totals for income, deductions and credits into up to four columns, one per tax year, and figures the increase or decrease to tax. Parts II and III hold penalties and interest. The instructions say Form 8978 is filed with the partner's federal income tax return for the reporting year.

You can fill out Form 8978 free in your browser on this page and download the PDF without an account.

What's on Form 8978

Header and source of adjustments

Name of partner(s), partner tax ID number, and two boxes for the source of review year adjustments: BBA Audit or AAR Filing.

Part I, lines 1a to 5: corrected taxable income

Income and deductions per the original return or as previously adjusted, the adjustments from Schedule A, lines 2 and 4, and corrected taxable income, in columns (a) through (d), one per tax year ended.

Lines 6 to 13: corrected tax

Income tax and alternative minimum tax on line 5, credits per the return plus the Schedule A, line 6 adjustments, corrected income tax liability, tax as previously shown, and the increase or decrease for each column.

Line 14: total change in tax

The sum of line 13, columns (a) through (d). The form says to enter it here and on the appropriate line of the tax return.

Part II: penalties

Line 15 holds penalties for each tax year column and line 16 their total.

Part III: interest

Line 17 holds interest for each tax year column and line 18 their total.

How to fill out Form 8978

  1. 1

    Check the source box

    Check BBA Audit or AAR Filing. The instructions say adjustments from an AAR and from a BBA audit go on separate Forms 8978 and Schedules A, and the AAR-related form is completed first when both apply.

  2. 2

    Complete Schedule A

    List each adjustment from Form 8986, Part V, on Schedule A (Form 8978). Its totals on lines 2, 4 and 6 go to Form 8978, lines 1b, 3b and 9b.

  3. 3

    Lines 1a to 5

    For each tax year column, enter income and deductions as shown on the original or amended return or as adjusted by the IRS, add the adjustments, and subtract line 4 from line 2.

  4. 4

    Lines 6 to 13

    The instructions ask for a separate statement showing how corrected income tax and any AMT were figured. Combine the credits, subtract to get corrected liability, then subtract line 12 from line 11.

  5. 5

    Line 14

    Add line 13 across all columns and carry the total to the reporting year income tax return. With more than 4 applicable tax years, the instructions say to prepare additional Forms 8978.

  6. 6

    Lines 15 and 17

    Enter penalties listed on Form 8986, Part V, with a statement showing how they were figured, and interest for each year with the computation attached. The instructions say interest is not figured on decreases in tax.

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Where it goes, interest and related rules

Where it goes

The instructions say Form 8978 is filed with the federal income tax return for the partner's reporting year, along with Schedule A (Form 8978) and the calculation statements.

Reporting year

The partner's tax year that includes the date the partnership furnished the Forms 8986. That date is on Form 8986, Part II, item G.

Interest rate

The instructions say interest on an increase in tax uses the underpayment rate with five percentage points in place of three. For a Form 8986 from an AAR, that substitution is not made.

Penalties and interest

The instructions say penalties and interest are included in the net payment for the reporting year but are not reported on the return and are not part of the additional reporting year tax.

Credits and Form 3800

Credit changes reported on Form 8978 are not repeated on Form 3800. Supporting Forms 3800 may be attached when each is labeled "Form 3800 for Form 8978 Calculation Only."

Non-income tax changes

The instructions say Form 8978 is only for income tax. Related changes such as self-employment tax go on an amended return for the first affected year.

Related forms

Who files Form 8978?

  • Individual partners

    A partner who files an individual return and received a Form 8986. The instructions' example shows a calendar year individual attaching Form 8978 to a Form 1040.

  • Corporate partners

    The instructions say a corporation that receives the same kind of Form 8986 follows the same procedures and includes Form 8978 and Schedule A with its own income tax return.

  • Trusts and estates, for taxable items

    An entity such as a trust or estate uses Form 8978 for adjustments to items taxable to the entity. For items that pass through to its owners or beneficiaries, it follows the Forms 8985 and 8986 instructions.

  • Foreign corporate partners

    The instructions say foreign corporate partners complete separate Forms 8978 and Schedules A for effectively connected income (ECI) and for FDAP income, each clearly marked.

  • Not for pass-through partners

    Partnerships and S corporations do not use Form 8978 for adjustments that pass through to their own partners or shareholders. The instructions point them to Forms 8985 and 8986.

The instructions say every partner (except pass-through partners) that receives a Form 8986 from a pass-through entity files Form 8978 to report any additional reporting year tax from its share of the reviewed year adjustments.

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Questions about Form 8978

Who files Form 8978?

The instructions say every partner, except pass-through partners, that receives a Form 8986 from a pass-through entity files it to report additional reporting year tax.

Is Form 8978 filed on its own?

No. The instructions say it is filed with the partner's federal income tax return for the reporting year, together with Schedule A (Form 8978) and the supporting statements.

What if adjustments come from both an audit and an AAR?

Each source type goes on its own Form 8978 and Schedule A. The instructions say to complete the AAR-related form first and report the sum of all line 14 amounts on the return.

What if more than 4 tax years are affected?

The instructions say to prepare additional Forms 8978, each with its own Schedule A, and report the total of all line 14 amounts on the return.

Which years go in columns (a) through (d)?

Only applicable tax years: the first affected year and any intervening year with related changes. The instructions say a year that is not impacted does not have to be shown.

Where does the line 14 amount go?

On the appropriate line of the partner's income tax return for the reporting year, following the instructions for that return.