Do I Prorate Income from a Fiscal Year K-1?

Question from a web visitor: if I receive a fiscal year K-1, do I prorate the income?

Answer: No.

As I’ve written about several times, the recipient of a fiscal year K-1 reports the income from the K-1 (or the loss, etc.) based on the fiscal year end.

For example, a person receiving a K-1 with an end date of September 30, 2017, will be report that K-1 on their 2017 tax return.

The fact that the K-1 in this example has a beginning date of October 1, 2016, will have meaning to the entity issuing the K-1, but recipients look at the ending date to determine when to report the K-1 on their personal Form 1040.