How it works
Form 8865 is filed by U.S. persons with interests in certain foreign partnerships under four categories: Category 1 controlled the partnership (more than 50 percent), Category 2 owned 10 percent or more of a U.S.-controlled partnership, Category 3 contributed property above thresholds, and Category 4 acquired or disposed of a significant interest. The schedules mirror a partnership return. Penalties start at 10,000 dollars per year for control and ownership categories, with contribution penalties based on the value transferred.
Why it matters
Foreign investment funds, joint ventures, and family businesses abroad are frequently foreign partnerships for U.S. purposes, and a DAO with foreign members can be too.
Related: Form 1065. Read more: Form 8865 guide.
