Schedule K-1: what to provide with your tax return

Why the type of K-1 matters

A partnership generally issues Schedule K-1 (Form 1065), an S corporation issues Schedule K-1 (Form 1120-S), and an estate or trust can issue Schedule K-1 (Form 1041). Each form reports a recipient's share of different tax items.

Do not use only a single income box as a summary. Interest, dividends, capital gains, credits, deductions, foreign items, and other coded amounts can flow to different parts of an individual return.

Provide the full package

Provide every page of the K-1 and every attached statement. Attachments can contain codes, footnotes, state information, basis-related data, foreign information, or other details needed to place an item correctly on the return.

If a corrected or amended K-1 is issued later, provide the new version and identify which prior version it replaces.

Basis and limitation questions

Some losses or deductions can depend on basis, at-risk rules, passive-activity rules, or other limitations. A K-1 by itself does not always contain every fact needed to determine whether a reported loss is currently deductible.

Keep prior-year K-1s, contribution and distribution records, purchase or ownership records, and any basis schedules you have received or maintained.

Facts to flag before preparation

Mention a new or disposed ownership interest, final K-1, sale of an interest, distributions, multiple-state information, foreign items, or a K-1 received after the rest of the return was already prepared.