SESK: Stuff Everyone Should Know · sesk.info/biz-partnership-pass-through
Does a partnership pay federal income tax on its profits?
No. It files Form 1065 and passes profits through to the partners.
- Yes, at the 21 percent corporate rate
- No, profits pass through to the partners ✔
- Yes, but only in its first year
Why: A partnership files a yearly information return, Form 1065, but pays no income tax itself. Each partner reports their share of the profit or loss on their personal return.
Huh, didn't know that: Each partner gets a Schedule K-1 from the partnership showing their share.
What did one penny say to the other? Let's get together and make cents.
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References
Answer: No, profits pass through to the partners. A partnership files a yearly information return, Form 1065, but pays no income tax itself. Each partner reports their share of the profit or loss on their personal return.
- IRS: Tax information for partnerships www.irs.gov/businesses/small-businesses-self-employed/partnerships
it does not pay income tax. Instead, it "passes through" profits or losses to its partners.
Checked 2026-10-11.
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