What is Schedule K-1?

Where K-1s come from

Partnerships (Form 1065) and S-corps (Form 1120-S) don't pay federal income tax — their results flow to owners. The K-1 is the carrier: your slice of profit, loss, distributions and separately stated items.

What trips people up

• You're taxed on your share of profit, not on what was distributed — profitable years with no cash out still create tax
• K-1s arrive late (March 15 entity deadline), which is why partners often extend personal returns
• Losses may be limited by basis and at-risk rules before you can use them

If yours is wrong

The entity return drives the K-1 — fixing it means amending the 1065/1120-S, not editing your copy.