Form 1065

Definition

Form 1065 is a tax form used by partnerships to report their income, deductions, gains, losses, and other financial information to the Internal Revenue Service (IRS).

What is a Form 1065?

The primary purpose of Form 1065 is to report the partnership’s income, deductions, gains, losses, and other financial information for the tax year. The form is used to calculate the partnership’s taxable income or loss, which is then allocated to the individual partners based on their ownership interests in the partnership.

Partnerships are required to file Form 1065 if they engage in a trade or business in the U.S. and have two or more members. This includes general partnerships, limited partnerships, limited liability partnerships (LLPs), limited liability companies (LLCs) treated as partnerships for tax purposes, and certain other entities classified as partnerships for federal tax purposes.

Form 1065 requires partnerships to report various types of income, deductions, and other financial information, including:

• Partnership income and expenses from operations, investments, and other sources.
• Allocation of income or loss to each partner based on their ownership percentage or as specified in the partnership agreement.
• Certain credits, deductions, and other tax items that may affect the partnership’s taxable income or tax liability.
• Information about the partners, including their names, addresses, tax identification numbers, and capital account balances.

Failure to timely file Form 1065 or accurately report partnership income and other financial information may result in penalties imposed by the IRS. 

Example of a Form 1065

ABC Partnership is required to file Form 1065 to report its income, deductions, and other financial information for the tax year ending December 31, 2023.

ABC Partnership gathers the necessary financial records, including income statements, balance sheets, and partnership agreements, to complete Form 1065. The partnership’s tax preparer uses the information provided to accurately fill out the form, including reporting partnership income, deductible expenses, and other relevant financial data.

Once completed, Form 1065 is filed electronically with the Internal Revenue Service (IRS). By timely filing Form 1065, ABC Partnership ensures compliance with federal tax laws and fulfills its reporting obligations to the IRS.