What type of information does Schedule K-1 provide?

Schedule K-1 is a tax document that partners in a partnership or shareholders in an S corporation receive. It details each partner's or shareholder's share of the entity's income, deductions, and credits for the tax year. This information is necessary because it informs the individual partners or shareholders about their portion of the earnings or losses generated by the partnership or S corporation, which they must report on their individual tax returns.

This makes option A the most accurate representation of what Schedule K-1 provides. It focuses on the income and losses allocated to each partner or shareholder, which is essential for their tax reporting obligations. Understanding these allocations is crucial for correctly filing personal income taxes, as what is reported on the K-1 directly impacts the individual’s taxable income.

In contrast, the other options do not accurately describe the purpose of Schedule K-1. While tax deductions and business expenses are important, Schedule K-1 specifically relates to the income and losses that need to be reported by partners or shareholders. Moreover, it is not a personal income report in the sense of summarizing all personal income; instead, it reflects only the share of income or loss attributable to the partnership or S corporation activities.