In a partnership, how are gains and losses typically reported?

In a partnership, gains and losses are typically reported individually by each partner. This is because partnerships are pass-through entities, meaning that the partnership itself does not pay income tax. Instead, the individual partners receive their share of the partnership's profits or losses and report that information on their own personal tax returns.

This structure allows partners to directly reflect their share of the income or losses from the partnership on their personal tax filings, which can have implications for their overall tax liability. Each partner receives a Schedule K-1 from the partnership that details their individual share of the partnership’s earnings, deductions, and credits, allowing them to accurately report this information when they file their taxes.

Other options do not align with how partnerships operate. For instance, a corporation reporting gains and losses refers to a different structure entirely and does not apply to partnerships. Shared equal distribution of gains and losses may not accurately reflect the agreement between partners, as they can have different ownership percentages and terms. Lastly, while partners do incorporate their partnership earnings into their personal tax filings, this process happens at an individual level, making "individually by partners" the clearest and most direct answer.