There are different partner types allowed in the formation of a partnership, as allowed per IRS guidelines. A partner classification must be selected on each partner’s Schedule K-1 (Form 1065) Partner’s Share of Income, Deductions, Credits, etc. within TaxAct® to calculate the partner’s reportable items correctly. Below is an explanation of these partner classifications.
- General partner or LLC manager – A general partner is a partner who is personally liable for partnership debts. An LLC manager is a manager of a limited liability company (LLC).
- Limited partner - A limited partner is a partner in a partnership formed under a state limited partnership law, whose personal liability for partnership debt is limited to the amount of money or other property that the partner contributed or is required to contribute to the partnership. Some members of other entities, such as domestic or foreign business trusts or limited liability companies that are classified as partnerships, may be treated as limited partners for certain purposes.
- LLC member – An LLC member is a member of a limited liability company (LLC).
To select your partner classification within TaxAct and IRS Form 1065:
- From within your TaxAct return (Online or Desktop), click K-1 Wizard, then click Continue. On smaller devices, click in the upper left-hand corner, then click K-1 Wizard.
- Click + Add Schedule K-1 to create a new copy of a Schedule K-1 or click Edit to review a Schedule K-1 already created.
- Click Quick Entry to scroll down to answer all applicable questions or click Step-by-Step Guidance to proceed with the program interview questions.
- On the screen titled Partner – Classification, select the partner’s classification type, then click Continue.
Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.