Partnership Income and Expenses Partnership Income and Expenses Form 1065 is an information return filed by a partnership to report income, deductions, gains, and losses from partnership operations.
Partners pay tax on partnership income on their own individual returns.
Partners are taxed on their distributive share of partnership items, whether or not they are distributed to the partner. Business income from a partnership is generally computed in the same manner as an individual would on Schedule C or F, and is passed through as ordinary income to the partner on Schedule K-1. Other items of partnership income, such as interest, dividends, capital gains, and rental income are computed separately from business income, and are also passed through to the partner on Schedule K-1. An individual reports ordinary income from a partnership on Schedule E of Form 1040. Other items of income or loss are reported on the appropriate forms or schedules.