Partnerships and S corporations are flow-through entities. In connection with filing annual tax returns, these entities must include Form K-1 in the returns. What is Form K-1, what is its purpose, and who receives the form?

A. Form K-1 is prepared for each shareholder in an S corporation and is filed with Form 1120S. It reports the separate income, deductions, losses, and credits that flow through to each shareholder. The shareholders, in turn, take the information from their schedule K-1 and report the various items on their individual returns.

B. Form K-1 is prepared for each partner in a partnership and is filed with Form 1065. It reports the separate income, deductions, losses, and credits that flow through to the partners. The partners, in turn, take the information from their schedule K-1 and report the various items on their individual returns.

C .Form K-1 reports the results of the partnership's operations as a whole. This form is prepared for the partnership and is filed with Form 1041. It reports the income that the partnership generates during the year. The partners each receive a copy of the form for their records.

D. Both A and B.