K1 Generator
Overview
The K1 Generator skill produces Schedule K-1 tax documents for limited partners, handling complex tax allocations including carried interest treatment under IRC Section 1061. It ensures accurate, timely tax reporting for fund distributions.
Capabilities
K-1 Preparation
- Generate Schedule K-1 forms
- Calculate partner tax allocations
- Handle tiered partnership structures
- Support state K-1 requirements
Tax Allocation
- Allocate income by character (ordinary, capital gains)
- Handle qualified opportunity zone provisions
- Apply Section 1061 carried interest rules
- Manage tax basis tracking
Distribution Reporting
- Report distributions to partners
- Track return of capital vs. gains
- Handle installment sale treatments
- Manage escrow release allocations
Compliance Support
- Generate required tax schedules
- Support LP tax planning
- Provide allocation explanations
- Track filing deadlines
Usage
Generate K-1s
Input: Fund activity, partner data
Process: Calculate allocations, generate forms
Output: K-1 documents by partner
Calculate Tax Allocations
Input: Fund income/loss, allocation provisions
Process: Apply allocation methodology
Output: Partner allocation schedules
Handle Distribution Reporting
Input: Distribution data
Process: Classify and allocate
Output: Distribution reporting schedules
Prepare State K-1s
Input: State allocation data
Process: Generate state-specific K-1s
Output: State K-1 documents
K-1 Components
| Component | Description | |-----------|-------------| | Box 1-3 | Ordinary income/loss | | Box 8-10 | Capital gains/losses | | Box 11 | Section 1231 gains/losses | | Box 13-20 | Other items | | Schedules | Supporting detail |
Integration Points
- Distribution Waterfall Calculation: Allocation basis
- Waterfall Calculator: Distribution data
- Tax Coordinator (Agent): Support tax work
- Fund Accountant (Agent): Coordinate accounting
Tax Considerations
| Consideration | Treatment | |---------------|-----------| | Section 1061 | 3-year hold for LTCG on carry | | QSBS | Section 1202 exclusion tracking | | State Taxes | State-specific allocations | | Foreign Partners | Withholding requirements |
Best Practices
- Start K-1 preparation early in year-end
- Coordinate with fund tax advisors
- Provide LP tax planning estimates
- Document allocation methodology
- Track basis and capital accounts accurately