How to Read a K-1

Today’s episode is all about taxes! Specifically, we’re going to be talking about K-1s. A K-1 is a tax form that you get from private investment (typically an LLC.) on an investment you’ve made. This is the tax form you’re going to get yearly from that sponsor so you can pay your taxes on that income.

If you’re ever going to be making investments in alternative assets, most likely you’re going to be getting a K-1. Be sure to tune in to get all the basis on what exactly a K-1 is, how they work, the key pieces of information within them, their benefits, and our tips!

Key Takeaways:

[:12] About today’s episode!

[:48] What is a K-1?

[3:54] The key pieces of information in the K-1; covering box 1 and 2 of the K-1. 

[10:21] Discussing box 19 of the K-1: the distribution (the actual cash flow you receive that year from your investment.)

[13:07] Discussing box L: the partner’s capital account analysis (which keeps track of your basis in the investment.)

[14:53] Working through an example to illustrate how a K-1 works.

[15:26] When do you get a K-1? How should investors investing in alternative assets be thinking about K-1s? And are they a huge headache or are they pretty straight forward? 

[16:44] Our tip for if you’re receiving many K-1s.

[18:41] The bottom line of K-1s!

[19:12] How to go about doing your K-1s.

Mentioned in this Episode:

K-1

Pass-Through Entity

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