How to Read a K-1

How to Read a K-1

Author: Brad Johnson April 25, 2019 Duration: 20:28

Today’s episode is all about taxes! Specifically, we’re going to be talking about K-1s. A K-1 is a tax form that you get from private investment (typically an LLC.) on an investment you’ve made. This is the tax form you’re going to get yearly from that sponsor so you can pay your taxes on that income.


If you’re ever going to be making investments in alternative assets, most likely you’re going to be getting a K-1. Be sure to tune in to get all the basis on what exactly a K-1 is, how they work, the key pieces of information within them, their benefits, and our tips!


Key Takeaways:

[:12] About today’s episode!

[:48] What is a K-1?

[3:54] The key pieces of information in the K-1; covering box 1 and 2 of the K-1. 

[10:21] Discussing box 19 of the K-1: the distribution (the actual cash flow you receive that year from your investment.)

[13:07] Discussing box L: the partner’s capital account analysis (which keeps track of your basis in the investment.)

[14:53] Working through an example to illustrate how a K-1 works.

[15:26] When do you get a K-1? How should investors investing in alternative assets be thinking about K-1s? And are they a huge headache or are they pretty straight forward? 

[16:44] Our tip for if you’re receiving many K-1s.

[18:41] The bottom line of K-1s!

[19:12] How to go about doing your K-1s.


Mentioned in this Episode:

K-1

Pass-Through Entity


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For those looking beyond the ticker symbols, The Alternative Investor explores the tangible and often complex world of assets that don't trade on a public exchange. Host Brad Johnson, drawing from his experience at Evergreen Capital, believes a well-rounded portfolio often exists outside the daily noise of the stock market. This podcast digs into the practicalities of private equity, real estate, venture capital, and other non-traditional avenues. While these opportunities can offer different paths to growth, they come with their own unique set of questions and due diligence. Each conversation is geared towards demystifying that process. You'll hear detailed discussions on how these investments actually work, the structures involved, and the long-term mindset they require. The aim isn't to offer quick tips, but to provide a clearer framework for evaluation. Johnson breaks down real-world cases and strategies, focusing on the critical factors that can influence an outcome. It’s a resource for anyone considering how to allocate capital towards assets that aren’t as easily quoted or sold, with the understanding that higher potential returns often walk hand-in-hand with increased complexity. Tune in for a straightforward take on building resilience and potential through alternative holdings.
Author: Language: English Episodes: 50

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