I belong to a small partnership, and I am told that I have to file my portion of profits from the partnership. Can you please advise me as to how I have to report this?
When CPA or accountant prepares the Partnership tax returns, a form called K-1 is distributed to each partner. This K-1 form that is sent to you represents your share of the distributed share of profits and loss, along with certain special items such as section 179 depreciation expense.
This information from the K-1 has to be reported on Schedule E of your form 1040. Usually when you present this form to your tax preparer he will be able to process this information for you. But, please pay special attention to losses on your K-1, sometimes these losses are not deductible on your tax return due to Basis Limitations.
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