Part II. Information About the Partner

Item E If the partner is an individual, the partnership will enter the partner’s SSN or individual taxpayer identification number (ITIN). For all other partners, the partnership will enter the partner’s employer identification number (EIN). In the case of a disregarded entity (DE), the partnership will enter the TIN of the beneficial owner of the DE in item E and the beneficial owner’s address in item F.

If the partner is an IRA, the partnership will enter the identifying number of the custodian of the IRA.

For your protection, this form may show only the last four digits of the TIN in items E and H2, as noted under Purpose of Schedule K-1, earlier. However, the partnership has reported your complete identification number to the IRS.

Item H2 If the partner is a DE, such as a single-member LLC that didn’t elect to be treated as a corporation, the partnership

MAGI. For a definition of MAGI, see Special $25,000 allowance in Pub. 925. Also see Line 6 in the Instructions for Form 8582.

Special rules for certain other activities. If you have net income (loss), deductions, or credits from any activity to which special rules apply, the partnership will identify the activity and all amounts relating to it on Schedule K-1 or on an attached statement.

If you have net income subject to recharacterization under Temporary Regulations section 1.469-2T(f) and Regulations sections 1.469-2(f)(5) and (6), report such amounts according to the Instructions for Form 8582 (or Form 8810).

If you have net income (loss), deductions, or credits from any of the following activities, treat such amounts as nonpassive and report them as indicated in these instructions.

Partner's Inst. for Sch. K-1 (Form 1065) (2025) 11

will check the “DE” box and enter the name and TIN of the DE.

Item J Generally, the amounts reported in item J are based on the partnership agreement. If your interest commenced after the beginning of the partnership’s tax year, the partnership will have entered, in the “Beginning” column, the percentages that existed for you immediately after admission. If your interest terminated before the end of the partnership’s tax year, the partnership will have entered, in the “Ending” column, the percentages that existed immediately before termination.

The ending percentage share shown on the “Capital” line is the portion of the capital you would receive if the partnership was liquidated at the end of its tax year by the distribution of undivided interests in the partnership’s assets and liabilities. If your capital account is negative or zero, the partnership will have entered zero on this line.

There are two options the partnership can use to indicate the source of a decrease: sale or exchange. The “Sale” checkbox will be checked if you sold all or part of your partnership interest to a new or pre-existing partner during this tax year, regardless of whether you recognized gain or loss on the transaction(s). The “Exchange” checkbox will be checked if you exchanged all or part of your partnership interest with a new or pre-existing partner during this tax year, regardless of whether you recognized gain or loss on the transaction(s). You may have realized a gain or loss on the transfer or disposition of your interest. See codes AB, AC, and AD under Box 20, later, for items that have special gain or loss treatment. For more information, see Disposition of Partner’s Interest and Partnership Distributions in Pub. 541.

Item K1 Item K1 should show your share of the partnership’s nonrecourse liabilities, partnership-level qualified nonrecourse financing, and other recourse liabilities at the beginning and the end of the partnership’s tax year. If you terminated your interest in the partnership during the tax year, item K1 should show the share that existed immediately before the total disposition. A partner’s recourse liability is any partnership liability for which a partner is personally liable.

If this partnership invested in other partnerships, item K1 will include your share of partnership liabilities from those other partnerships, except to the extent the liabilities from those other partnerships are owed to this partnership.

Use the total of the three amounts for figuring the adjusted basis of your partnership interest.

Generally, you may use only the amounts shown next to “Qualified nonrecourse financing” and “Recourse” to figure your amount at risk. Don’t include any amounts that aren’t at risk if such amounts are included in either of these categories.

If your partnership is engaged in two or more different types of activities subject to the at-risk provisions, or a combination of at-risk activities and any other activity, the partnership should give you a statement showing your

share of nonrecourse liabilities, partnership-level qualified nonrecourse financing, and other recourse liabilities for each activity.

Qualified nonrecourse financing secured by real property used in an activity of holding real property that’s subject to the at-risk rules is treated as an amount at risk. Qualified nonrecourse financing generally includes financing for which no one is personally liable for repayment that’s borrowed for use in an activity of holding real property and that’s loaned or guaranteed by a federal, state, or local government or borrowed from a qualified person.

Qualified persons include any persons actively and regularly engaged in the business of lending money, such as a bank or savings and loan association. Qualified persons generally don’t include related parties (unless the nonrecourse financing is commercially reasonable and on substantially the same terms as loans involving unrelated persons), the seller of the property, or a person who receives a fee for the partnership’s investment in the real property.

See Pub. 925 for more information on qualified nonrecourse financing.

Both the partnership and you must meet the qualified nonrecourse rules on this debt before you can include the amount shown next to “Qualified nonrecourse financing” in your at-risk computation.

See Limitations on Losses, Deductions, and Credits , earlier, for more information on the at-risk limitations.

Item K3 If the box in item K3 is checked, see the instructions for box 20, code X, for additional information.

Item L The partnership must report your beginning capital account and ending capital account for the year using the tax-basis method, including the amount of capital you contributed to the partnership during the year, your share of the partnership’s current-year net income or loss as computed for tax purposes, any withdrawals and distributions made to you by the partnership, and any other increases or decreases to your capital account determined in a manner generally consistent with figuring the partner’s adjusted tax basis in its partnership interest (without regard to partnership liabilities), taking into account the rules and principles of sections 705, 722, 733, and 742. See the Instructions for Form 1065 for more details.

For many reasons, your ending capital account as reported to you by the partnership in item L may not equal the adjusted tax basis in your partnership interest. Generally, this is because a partner’s adjusted tax basis in its partnership interest includes the partner’s share of partnership liabilities (whereas capital accounts determined by using the tax-basis method don’t include the partner’s share of partnership liabilities). In addition, your partnership may not have all the necessary information from you to accurately figure the adjusted tax basis in your partnership interest due to partner-level adjustments. You’re responsible for maintaining an annual

12 Partner's Inst. for Sch. K-1 (Form 1065) (2025)

record of the adjusted tax basis in your partnership interest as determined under the principles and provisions of subchapter K, including, for example, those under sections 705, 722, 733, and 742. Regulations section 1.705-1(a)(1) provides that a partner is required to determine the adjusted basis of its interest in a partnership when necessary to determine its tax liability or that of any other person. For example, a determination is required in ascertaining the extent to which a partner’s share of loss is allowed, when there is a sale or exchange of all or part of a partnership interest, and when a partner’s entire partnership interest is liquidated. The adjusted basis of a partner’s interest in a partnership is determined without regard to any amount shown in the partnership books as the partner’s capital, equity, or similar account.

Item M If you’ve contributed property with a built-in gain or loss during the tax year, the partnership will check “Yes.” Also, the partnership will attach a statement showing the property contributed, the date of the contribution, and the amount of any built-in gain or loss. A built-in gain or loss is the difference between the FMV of the property and your adjusted basis in the property at the time it was contributed to the partnership. If you contributed more than 10 properties on a single date during the tax year, the statement may instead show the number of properties contributed on that date, the total amount of built-in gain, and the total amount of built-in loss.

The partnership is providing this for your information. Contributions of property with a built-in gain or loss could affect a partner’s tax liability (in matters concerning precontribution gain or loss, and distributions subject to section 737) and may also affect how the partnership allocated certain items on your Schedule K-1. For information on precontribution gain or loss, see the instructions for box 20, code W. For information on distributions subject to section 737, see the instructions for box 19, code B.

Item N If you’re allocated a share of section 704(c) gain or loss, the partnership will report your net unrecognized section 704(c) gain or loss both at the beginning and at the end of the partnership’s tax year in item N. The partnership can use any reasonable method in reporting net unrecognized section 704(c) built-in gain or loss to you. You’ll be allocated unrecognized section 704(c) gain or loss if:

• You contributed property with FMV in excess of adjusted tax basis (built-in gain property);

• You contributed property with FMV less than adjusted tax basis (built-in loss property); or

• The partnership elected, under certain circumstances, to revalue property (book-up or book-down) on its books to reflect changes in the FMV of such property. These revaluations are sometimes referred to as “reverse section 704(c) allocations.”

The partnership is providing this for your information. If the partnership disposes of the property or there are special allocations due to depreciation, depletion, or amortization, the partnership will report these items on other parts of Schedule K-1.

Note: Although the partnership is reporting the beginning and ending balances on an aggregate net basis, it’s generally required to keep records of this information on a property-by-property basis.