The passive investor or LP would then file their K-1 with their personal tax return.įor simple math, let’s say we have $1,000,000 in income in the given tax year and only two partners. The partnership would then calculate a K-1 tax form that details each limited partner/passive investor’s share of the firm’s income, losses, deductions, credits, and how many distributions were given to them in that year. The General Partner (GP), also referred to as the syndicator or sponsor of a deal (like us here at Willowdale Equity), would prepare and file a 1065 information tax form. The direct ownership that passive investors get from investing in a syndication, for example, is all the pass-through tax advantages and all the investment income and expenses that flow down from the partnership to each owner in the deal. The partnership itself does not pay taxes each individual in the partnership is responsible for their share. tax code allows for entities such as Partnerships, S corporations, Trusts, and Estates to issue a K-1 to the owners or partners in an investment.
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