TN 13 (11-12)

RS 01803.140 Determining Partnership Net Income

A. Policy on partnership net income

Generally, a partnership does not pay income tax on its income, but “passes through” any profits or losses to its partners. Each partner is liable for tax on his or her distributive share of the partnership income.

Every partnership is required to (1) file an Internal Revenue Service (IRS) Form 1065 U.S. Return of Partnership Income to report the income, gains, losses, deductions, credits, etc., from the operation of the partnership; and (2) give each partner a Schedule K-1 showing their net earnings or loss from the partnership’s income or loss. For more information on partnership’s income or loss, see IRS Form 1065 - Partner's Instructions for Schedule K-1.

Each partner files an IRS form 1040 Schedule SE Self-Employment Tax to report his or her self-employment income (SEI).

B. References

RS 01802.300 Partnership

RS 01802.308 Taxation and Tax Returns

RS 01802.360 Allocating NE from a Partnership

RS 01802.375 Computing NE When Partners Receive Salaries

RS 01802.400 SEI in Community Property States
IRS Publication 541-Partnerships
IRS Information about Partnerships


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0301803140
RS 01803.140 - Determining Partnership Net Income - 11/20/2012
Batch run: 11/20/2012
Rev:11/20/2012