(Revised 01/01/04 ML2893)
A partnership is a self-employment business set up as a partnership with two or more partners. In these cases, there should be an oral or written agreement. Generally, a partner’s share of income, gain, loss, deductions or credits is determined by a partnership agreement.
In addition to personal income tax forms, partnerships are required to file 1065 and K-1 forms. The business income and liabilities are the responsibility of all the partners, with the partnership defining shares of ownership and responsibility.
If the source of the partnership income is rental property, the determination of whether income is earned or unearned is based on whether or not the individual is actively participating in the rental business at least 20 hours per week.
If the source of the partnership income is non-rental, the income is considered earned self-employment income.
