Schedule K-1 (Form 1065) is issued to members of an LLC when the LLC is treated as a partnership for federal tax purposes.
This page explains why LLC members receive Schedule K-1, how it applies to different types of LLCs, and how the information is used, based on official IRS instructions.
For a general explanation of the form, see Schedule K-1 (Form 1065): Overview.
Why LLC Members Receive Schedule K-1
An LLC does not automatically determine how it is taxed. For federal tax purposes, an LLC may be treated as:
- A partnership
- A corporation
- An S corporation
- A disregarded entity
If an LLC is taxed as a partnership, it must file Form 1065 and issue Schedule K-1 to each member.
Multi-Member LLCs and Schedule K-1
By default, a multi-member LLC is treated as a partnership unless it elects to be taxed as a corporation.
In this case:
- The LLC files Form 1065
- Each member receives Schedule K-1
- Income, losses, and other tax items pass through to members
Each member’s Schedule K-1 reflects their ownership interest and activity for the tax year.
Single-Member LLCs and Schedule K-1
A single-member LLC is generally treated as a disregarded entity for federal tax purposes.
In most cases, a single-member LLC does not issue Schedule K-1, because it does not file Form 1065.
Instead, the LLC’s income and expenses are reported directly on the owner’s tax return.
LLCs That Elect Corporate Tax Treatment
If an LLC elects to be taxed as a corporation or an S corporation, it does not issue Schedule K-1 (Form 1065).
In those cases:
- C corporations report income on Form 1120
- S corporations issue Schedule K-1 (Form 1120-S), not Form 1065
The type of Schedule K-1 depends on the entity’s tax classification, not the legal form of the LLC.
What LLC Members Report Using Schedule K-1
For LLCs taxed as partnerships, Schedule K-1 reports each member’s share of:
- Ordinary business income or loss
- Guaranteed payments
- Capital contributions and distributions
- Credits and deductions
- Foreign income and taxes, if applicable
LLC members must report these items on their own tax returns, even if no cash distributions were received.
Capital Accounts and Ownership Changes
Schedule K-1 for LLC members includes capital account information that reflects:
- Initial contributions
- Additional contributions during the year
- Allocations of income or loss
- Withdrawals and distributions
Changes in ownership or capital structure during the year are reflected on the member’s Schedule K-1.
Related Situations and Guides
- When Do You Receive Schedule K-1?
- Do You Need to File If Schedule K-1 Shows No Income?
- Schedule K-1 vs Schedule K-3
Official Form
The official Schedule K-1 (Form 1065) issued by the IRS is available here: