Schedule K-1 (Form 1065) reports a partner’s allocable share of income, deductions, credits, and other items from a partnership. This schedule is part of Form 1065 (US Return of Partnership Income), and each equity partner receiving an allocation will receive a Schedule K-1.

Purpose of Schedule K-1:

By default, partnerships are pass-through entities for federal tax purposes, which means the partners are ultimately responsible for reporting their allocable share of income and paying taxes on their income tax returns.

The Schedule K-1 shows the allocation of income and deductions for each partner.

What are the Components of Schedule K-1?

Part I – Information About the Partnership:

Part II – Information About the Partner:

  • Partner name, address, and taxpayer identification number (TIN)
  • A question regarding whether the partner is a general partner or a limited partner
  • A question regarding whether the partner is a domestic partner or foreign partner for U.S. federal tax purposes.
  • What type of entity is the partner (e.g., individual, corporation, trust, estate, S corporation, partnership, disregarded entity, limited liability company (LLC), exempt organization, or nominee)
  • The partner’s percentage share of profit, loss, and capital
  • The partner’s allocable share of nonrecourse liabilities, qualified nonrecourse liabilities, and recourse liabilities
  • A reconciliation of the partner’s capital account analysis
  • A question regarding whether or not the partner contributed any property with a built-in gain or loss during the tax year
  • Does the partner have any allocation of unrecognized Section 704(c) gain or loss

Part III – Partner’s Share of Current Year Income, Deductions, Credits, and Other Items:

The partnership reports its gross income, deductions, credits, and other partnership items on Form 1065. The amounts are allocated amongst the partners and reported in Part III, Lines 1 through 21.

Video Tutorials for Form 1065 and Schedule K-1

Please view our videos below for information related to Schedule K-1

Additional Information

Taxpayers can find more information in the Form 1065 instructions and IRS Publication 541 (Partnerships).