Question

Why does an S corporation K-1 not have liabilities and profit/loss interest on Shareholder information section relative to the K-1 for a partnership.

Answer 1

There are two Schedule K-1 versions. One is for partners in partnership firms (Form 1065) and the other is for shareholders in an S corporation (Form 1120s).

The major differences between the two Schedule K-1 forms are as to how the income/losses and certain types of deductions are included.

• In a partner's Schedule K-1, the partner's share of the partnership income/losses and liabilities at the beginning and end of the year are required, as well as the partner's share of capital gains or losses.
• In a shareholder's Schedule K-1, the shareholder's share of income of different types, and of certain kinds of deductions must be itemized.
• On both types of Schedule K-1 forms, any self-employment income or losses from shares of the business must be entered, to calculate self-employment tax on Schedule SE.

The Schedule K-1 itself is not filed with the personal return but is sent to the IRS along with the appropriate business tax form (Form 1065 for a partnership; form 1120-S for an s corporation).