K-1 Tax form: Limited or General Partner for LLC Partnership

2 Replies

  • It is my understanding, that when you have an LLC limited partnership, at least one of the partners are General. We have 2 partners, and the type of business is rental.

    One partner is Limited and the other is General- who materially participates in the business.

    However, our CPA checked the box that says "Limited partner or other LLC member" on the K-1 form for BOTH partners.

    Will that pose a problem when we go to file on personal taxes? Or does it even matter?

    The options on the K-1 are:
    *General partner or LLC member-manager
    *Limited partner or other LLC member
    *Domestic partner
    *Foreign partner


    Should partner #1 have "Limited Partner" on their K-1 & Partner #2 have "General Partner" on their K-1?

    I would think that having the different statuses would be taxed differently, but I could be wrong...  

Since we're on the topic, I should also ask: If they are taxed differently, what is the difference? 

"It is my understanding, that when you have an LLC limited partnership, at least one of the partners are General. We have 2 partners, and the type of business is rental."

Your understanding is incorrect. An LLC has members, not partners. There are no "limited partners" and "general partners" in an LLC.

Is the LLC member-managed or manager-managed? What does the operating agreement dictate?

Member-managers should have the "General partner or LLC member-manager" box checked on their K-1.

All other members should have the "Limited partner or other LLC member" box checked.

Then the K-1 should specify whether the member is domestic or foreign.  It's not a single choice between all four, rather a choice between the first two and a choice between the last two.

These boxes are informational only. I've seen them wrong so many times I take them with a grain of salt. What really matters are the numbers on the K-1, if you're an RE professional, and whether or not you materially participate in the LLC activity. That's what affects your 1040.

You are most likely thinking of a Limited Partnership, not a Limited Liability Company.  An LP must have at least one general partner and one limited partner.

Thank you so very much for taking the time to respond, and for being so detailed! This is incredibly helpful! I have been trying to find this answer for so long, including making many calls to the IRS, and never getting to speak to anyone, waiting on hold for hours only for the call to drop. lol. 

I apologize for my lack of clarity. We have both an LLC registered with the state and a partnership for the business, and the LLC is taxed as partnership. One member is a general partner and the other member is a limited partner. So that would make our LLC member managed.

So to confirm, what you're saying is that the member manager's K-1 should say "General Partner or LLC manager". And the other partner, who does not participate in the business operations should say " Limited Partner or other LLC member". But even if that info is marked wrong on the K-1, the IRS is not that concerned about it-- They just want the numbers to be right. Is this what you're saying?