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Schedule K-1

The US tax form a partnership issues to each partner reporting their share of income, deductions and credits, used instead of the simpler forms issued by corporations and funds.

Partners are taxed on their allocated share of the partnership's results whether or not cash was distributed, which can create a tax bill without matching cash. Private funds structured as partnerships and publicly traded vehicles such as a master-limited-partnership both generate them.

K-1s often arrive late, well after other tax documents, and amended versions are common, which can force an extension or an amended return. Multiple state allocations add further complexity for pass-through entities operating across state lines.

The administrative burden is a genuine cost of the structure and is worth weighing against the tax advantage, particularly for smaller positions where the accounting fee can exceed the benefit. See limited-partnership and commodity-pool.

Related: master-limited-partnership, limited-partnership, commodity-pool, section-1256, cost-basis-method, private-equity

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