A partnership is defined as a relationship between two or more persons who join to carry on a trade or business, contributing money, property, labor, or skill, and sharing in profits and losses. Partnership types include limited partnerships (LP) and limited liability partnerships (LLP), each with distinct liability structures. A two or more member LLC is treated as a partnership for federal tax purposes unless it elects to be treated as an S-corporation.

Partnerships must file Form 1065, U.S. Return of Partnership Income. Form 1065 requires substantial information, including income, deductions, gains, losses, and specific schedules like Schedule K for income allocation and Schedule K-1 for individual partner reporting. The at-risk rules under Section 465 limit a partner’s deductible loss to their at-risk amount, requiring separate determination for each business activity, while Section 469 governs the use of passive activity losses. Part I of Form 1065 reports the partnership’s total income, including gross receipts, returns, cost of goods sold, and other income items. Part II details the partnership’s deductions, including salaries, guaranteed payments, rent, interest, and other business expenses. Neither Part I nor Part II includes items that must be reported separately on Schedule K and K-1.

The “Tax and Payments” section covers specific tax-related items such as interest due under the look-back method for long-term contracts and the income forecast method, both being partnership-level obligations. Form 1065 must be signed by a partner or an LLC member if the entity is an LLC classified as a partnership.