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 1065 return (Online or Desktop), click K-1 Wizard, then click Continue (on smaller devices, click in the top left corner of your screen, 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 (desktop program: click Review instead of Edit).
- Click Step-by-Step Guidance and continue with the interview questions until you reach the screen titled Partner – Classification.
- Click the Circle next to the applicable classification to select it.