2.1.2. Tax Allocation
Every business must file its income tax return with the IRS by March 15 each year (or if filing on a fiscal year basis, by the 15th day of the third month following the fiscal year’s end). For partnerships and LLCs, Form 1065 is used, and for S corporations Form 1120S. Because these businesses are pass-through entities, both forms include a section called Schedule K, which itemizes in great detail the sources of the business’s income, its credits and deductions, distributions, and foreign transactions.
From the information provided on Schedule K, the entity must prepare a separate document, unique for each of its partners, shareholders, or members, called a Schedule K-1. The entity must deliver the Schedule K-1s to these persons by the same date, March 15. Schedule K-1 identifies each owner’s share of the entity