{"id":20674,"date":"2026-04-02T02:00:00","date_gmt":"2026-04-02T07:00:00","guid":{"rendered":"https:\/\/www.hrblock.com\/tax-center\/"},"modified":"2026-04-02T11:19:14","modified_gmt":"2026-04-02T16:19:14","slug":"s-corporations-partnerships","status":"publish","type":"post","link":"https:\/\/www.hrblock.com\/tax-center\/small-business\/s-corporations-partnerships\/","title":{"rendered":"Partnerships, S Corporations, and C Corporation taxes"},"content":{"rendered":"\n

When starting or running a business, the structure you choose can affect how your income is taxed and what forms you need to file. Partnerships, S corporations, and C corporations are three common business types, and each is taxed differently under federal law.<\/p>\n\n\n\n

Understanding how these structures compare can help you see who pays the tax, how profits are reported, and what that means for business owners at tax time.<\/p>\n\n\n\n

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Partnerships<\/h2>\n\n\n\n

A partnership is an unincorporated business owned by two or more partners. Partnerships are pass\u2011through entities, which means the business itself doesn\u2019t pay federal income tax. Instead, it reports income, deductions, and other tax items to the partners, who then report them on their personal tax returns.<\/p>\n\n\n\n

Partnerships file Form 1065, U.S. Return of Partnership Income. Each partner receives a Schedule K\u20111, which shows that partner\u2019s share of income, losses, deductions, and credits. Partners use the information from Schedule K\u20111 to complete their individual tax returns. Partners who actively work in the partnership are subject to self-employment tax. Partnership distributions to partners are generally not subject to tax up to the partners\u2019 basis.<\/p>\n\n\n\n

In some cases, a partner may be able to deduct a loss from the partnership. However, the amount of loss that can be deducted may be limited by tax rules such as:<\/p>\n\n\n\n