Why it matters
The K-1 is how the owner reports the entity's activity on the owner's return. A late or incorrect K-1 can delay the owner's return and change the tax on both returns.
Example
A partner receives a Schedule K-1 (Form 1065) showing $40,000 of ordinary business income and a $10,000 distribution. The partner reports the income on the partner's return and tracks the distribution against basis.
Related terms
Questions about Schedule K-1
When are K-1s issued?
A partnership or S corporation generally issues K-1s with its return, which is due March 15 for a calendar-year entity. A trust or estate issues K-1s with Form 1041, generally due April 15 for a calendar year.