How Do I Report Income From A Schedule K-1?

If you are a partner in a partnership (Form 1065), member of an LLC or LLP treated as a partnership (Form 1065), shareholder of an S- corporation (Form 1120S), or beneficiary of a trust or estate (Form 1041), you should receive a Schedule K-1, referencing the number form shown, for tax reporting purposes.

Schedule K-1 show your share of the income and other items to be reported on your personal income tax return, as a result of the larger entity. The Schedule K-1 cross-references to schedules and line numbers on your return, and explanations of each item are included in the Instructions for Schedule K-1, with which you should have been provided as well.

Be aware that reporting of some K-1 entity income, deductions and credits, particularly those from businesses in which you do not actively participate, can get rather complex, and may be limited under various tax laws due to the passive activity rules, at-risk limitations, and other factors. Professional guidance with such matters is suggested.

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Tax Disclaimer: To ensure compliance with IRS Rules, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.