True or False: Schedule K-1 must be included in Schedule E of Form 1040.

Schedule K-1 is an important tax document used to report income, deductions, and credits from partnerships, S corporations, and some estates and trusts. When individuals receive a Schedule K-1, they must report this information on their income tax return. Specifically, for individual taxpayers, this is done on Schedule E (Supplemental Income and Loss) of Form 1040, which is used to report income or loss from various sources including partnerships and S corporations.

Including Schedule K-1 in Schedule E is essential because it ensures that the income or loss attributed to the taxpayer from the partnership or S corporation is correctly reported and taxed accordingly. This process helps maintain accurate tax reporting and ensures that individuals fulfill their tax obligations based on their share of the business entity's income or loss.

While the question touches on various specifics regarding business structures, the essential duty of including Schedule K-1 in Schedule E remains consistent for those who receive such a form, making the answer true for all relevant situations.