10.11 Partners and Members of LLCs and LLPs
As a general partner, your share of partnership income or loss during the partnership year ending within your tax year is passive or nonpassive, depending on whether you materially participated under any of the seven IRS tests(10.6) in the partnership activities during the year. Limited partners have a reduced ability to show material participation as discussed below. On Schedule K-1 of Form 1065, the partnership will identify each activity it conducts and specify the income, loss, deductions, and credits from each activity.
Not treated as passive income are payments for services ...
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