Updated October 18, 2026. Quick answer: Line 15 is business interest, line 16 is depreciation (16a, less 16b, equals 16c), line 17 is depletion other than oil and gas, and line 18 is employer contributions to retirement plans for common-law employees. The amounts come from the loan statements, Form 4562 and the plan records.
More IRS forms and schedules, read line by line: Form 5304-SIMPLE instructions and Form 5305-SIMPLE instructions.
Line 15: interest
The caption is “Interest (see instructions)”. The instructions say “Include only interest incurred in the trade or business activities of the partnership that isn’t claimed elsewhere on the return.” Several kinds of interest stay off the line, including “Debt used to purchase rental property or debt used in a rental activity.” and “Debt used to buy property held for investment.” Interest paid to a partner is handled this way: “Interest paid by a partnership to a partner for the use of capital, which should be entered on line 10 as guaranteed payments.”
The business interest limit
The instructions say “Business interest expense deduction is generally limited to the sum of business interest income, 30% of the adjusted taxable income (ATI), and floor plan financing interest.” They continue “A taxpayer meets the gross receipts test if the taxpayer has average annual gross receipts of $31 million or less for the 3 prior tax years under the gross receipts test of section 448(c).” And “If the partnership fails to meet the gross receipts test, Form 8990 is generally required.” That form is explained at Form 8990.
Line 16: depreciation
The captions are “Depreciation (if required, attach Form 4562)” for 16a and “Less depreciation reported on Form 1125-A and elsewhere on return” for 16b. The instructions say “On line 16a, enter only the depreciation claimed on assets used in a trade or business activity.” They continue “Enter on line 16b the depreciation included elsewhere on the return”. On the attachment they say “Complete and attach Form 4562 only if the partnership placed property in service during the tax year or claims depreciation on any car or other listed property.” See Form 4562 and Form 4562 lines 14 to 20.
Section 179 stays off this line: “Don’t include any section 179 expense deduction on this line.” The instructions add “it’s passed through to the partners in box 12 of Schedule K-1.” The partner side is at Schedule K-1 box 12.
Line 17: depletion
The caption is “Depletion (Do not deduct oil and gas depletion.)”. The instructions say “If the partnership claims a deduction for timber depletion, complete and attach Form T (Timber), Forest Activities Schedule.” The caution reads “Don’t deduct depletion for oil and gas properties.” It adds “Each partner figures depletion on oil and gas properties.”
Line 18: retirement plans
The caption is “Retirement plans, etc.”. The instructions say “Don’t deduct payments for partners to retirement or deferred compensation plans, including IRAs, qualified plans, and SEP and SIMPLE IRA plans, on this line.” Those amounts “are deducted by the partners on their own returns.” What does go on the line: “Enter the deductible contributions not claimed elsewhere on the return made by the partnership for its common-law employees under a qualified pension, profit-sharing, annuity, or SEP or SIMPLE IRA plan, and under any other deferred compensation plan.”
For employee IRAs the instructions say “include the contribution in salaries and wages on page 1, line 9”. A one-participant plan files Form 5500-EZ. Partner-level plan limits are a separate topic at 401(k) contribution limits.
Where the number comes from
Interest comes from loan statements and the interest allocation records. Depreciation comes from the asset records and Form 4562 where required. Depletion comes from the timber records. Retirement contributions come from the plan records for employees. Wages and guaranteed payments are on the lines 9 and 10 page.
Where it goes next
These lines flow into the total on line 22, whose caption is “Total deductions. Add the amounts shown in the far right column for lines 9 through 21”. The remaining deduction lines are on the lines 19 to 23 page. Items that must be stated separately go to Schedule K instead; see the Schedule K lines 1 to 4 page for how that schedule starts.
Edition and line numbers
This page reads the 2025 Form 1065 and its 2025 instructions, the current files irs.gov served on 2026-10-18. They are the files for the tax year 2025 return, filed in 2026. Form 1065 has no “Attach to” caption, so the form’s own title line is the check: it reads “U.S. Return of Partnership Income” and the period line reads “For calendar year 2025, or tax year beginning”. Check the tax year printed on the form you are filling in and use the line numbers on that year’s form, because a different year’s form can number or word its lines differently.
Common mistakes
- Deducting a partner’s own retirement contribution on line 18. The instructions say “Don’t deduct payments for partners to retirement or deferred compensation plans, including IRAs, qualified plans, and SEP and SIMPLE IRA plans, on this line.”
- Including section 179 in depreciation. The instructions say “Don’t include any section 179 expense deduction on this line.”
- Deducting oil and gas depletion at the partnership level. The instructions say “Don’t deduct depletion for oil and gas properties.”
Related: Form 1065, Form 8990, Form 4562, Form 4562 lines 14 to 20, and Form 5500-EZ.
Sources
- Instructions for Form 1065, U.S. Return of Partnership Income (2025): https://www.irs.gov/pub/irs-pdf/i1065.pdf
- Form 1065, U.S. Return of Partnership Income (2025): https://www.irs.gov/pub/irs-pdf/f1065.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.