Partner in a professional firm or multi-member LLC, K-1 income, guaranteed payments, buy-sell agreement, deferred compensation, partnership interest valuation.
SB-03 is the partnership-tax archetype: K-1 income with guaranteed payments under IRC §707(c), capital-account maintenance under Treas. Reg. §1.704-1(b), buy-sell agreement valuation, and phantom income from §704(b) special allocations the partner can't actually withdraw.
SB-03 exists because partnership tax is the densest pass-through regime in the code and creates testing surfaces no other corpus exercises. Form 1065 with Schedules K, K-1, M-1, M-2, and M-3 carries inside basis (IRC §743) versus outside basis (§705) reconciliation, §704(b) economic-effect allocation tests, §704(c) built-in-gain allocations on contributed property, guaranteed payments under §707(c) that bypass partnership-level netting, and §736 retiring-partner payments split between §736(a) ordinary and §736(b) capital. Buy-sell agreements are valued under IRC §2703 (formula-pricing safe harbors) and trigger life-insurance funding decisions. Phantom income — taxable allocations the partner cannot distribute because of working-capital constraints — is the recurring cash-flow trap; partners owe tax on income they didn't receive in cash. Deferred-compensation arrangements under IRC §409A appear in larger firms, with the 20% additional tax penalty for non-compliance.
The structural story is a household whose K-1 dwarfs the W-2 line and whose balance sheet sits mostly inside the partnership. Median income is $336k with median net worth $2.95M (much of it concentrated in the partnership interest itself, valued under the buy-sell formula). Liquid net worth ($1.29M median) reflects capital calls and the working-capital reserve partners must maintain. Self-employment-tax treatment varies by partner type — general partners pay SE tax on their distributive share under IRC §1402(a)(1), limited partners generally don't, and the LLC-member 'limited partner' question (the longstanding §1402 LLC ambiguity) is itself a planning surface.
SB-03 differs from SB-01 (single-owner S-Corp) by the presence of multiple owners and the partnership-tax machinery that comes with them. It differs from SB-02 (single-owner Schedule C) by the K-1 income and the absence of direct Schedule C reporting. The diagnostic features are the K-1, the capital account, and the buy-sell — without those, the household belongs elsewhere.
Aggregated across the 12 SB-03 households in the shipped v3 corpus corpus. Numbers describe the corpus, not population claims.
Brian and Nicole sit just above the SB-03 net-worth median — a dual-partner household where each spouse holds an interest in a separate firm, so two sets of K-1s, two capital accounts, and two buy-sell agreements all flow into a single MFJ return. The $597k of total liabilities reflects partnership-financed business debt that may or may not allocate to outside basis under §752; downstream advisor software has to disentangle recourse from nonrecourse to compute basis correctly. Debt payoff is on track because guaranteed payments cover personal cash flow; retirement is off track because capital-call obligations and working-capital reserves crowd out 401(k) maxing. This is the file where partnership-interest valuation drives most of net worth.
Every SB-03 household ships with — at minimum — these JSON fields populated. The full schema is documented in the data set you purchase.
Tax-software platforms use SB-03 for Form 1065 preparation flows — Schedule K-1 generation, §704(b) economic-effect allocation tests, §704(c) built-in-gain layers on contributed property, and §743(b) basis adjustments on partner-interest transfers. Wealth platforms use it for partnership-interest valuation under buy-sell formulas, §2703 conformity testing, and life-insurance-funded cross-purchase modeling. Estate planning teams use it for §736 retiring-partner-payment splits and the transfer-for-value §101(a)(2) life-insurance issue. Compliance teams testing Reg BI suitability for partner-level investment accounts use it because the underlying liquidity is materially overstated by aggregator services that treat the partnership interest as marketable.
SB-03 explicitly excludes single-owner businesses — those belong in SB-01 (S-Corp elected) or SB-02 (Schedule C). Publicly traded partnerships (PTPs / MLPs) under IRC §7704 are a different beast entirely and not represented here; passive-activity treatment of PTP income under §469(k) is its own corpus question. Family limited partnerships (FLPs) used for estate-planning discounts overlap with E-02 territory — if the FLP exists primarily for §2036 / §2704 valuation discount purposes rather than to operate a business, reach for E-02. Cannabis-industry partnerships hit §280E and live in N-04. Real-estate partnerships and syndication LPs belong to MB-03 (DSCR active investor) or P-04 (broader real-estate investor); SB-03 specifically assumes an operating-services partnership.
Income, net-worth, and partnership-interest-value bands during v3 synthesis were anchored to IRS SOI Form 1065 filer tabulations and Cerulli affluent-practice benchmarks for professional-services partnerships (legal, accounting, medical, architecture, financial services). State concentration in AL / FL / AK reflects a sampling choice that surfaces a mix of state-income-tax and no-state-income-tax planning rather than a population match. Per CLAUDE.md §9 the corpus is FROZEN — priors above describe synthesis intent, not auditable distribution fits. Buy-sell formula values are realistic in shape but not tied to a specific valuation snapshot or industry benchmark study.
SB-01 is the single-owner S-Corp. Use SB-01 when reasonable-comp and W-2/distribution split — not K-1 and capital accounts — are the diagnostic.
SB-02 is the single-owner Schedule C sole proprietor. Reach for SB-02 when SE-tax on Schedule C net income, not K-1 partnership tax, is the testing surface.
P-02 is the established business owner at higher net-worth tiers with succession planning and concentrated equity. Use P-02 when the household has outgrown the operating-partnership profile.
E-02 is the grantor estate-planning client whose FLP or trust exists for §2036 / §2704 discount purposes rather than operating purposes. Use E-02 when the partnership is an estate-planning vehicle.
SB-03 — Partnership / Multi-Member Business represents partners in operating-services partnerships and multi-member LLCs taxed as partnerships, receiving K-1 distributive shares plus guaranteed payments. It is the archetype for Form 1065 testing, §704(b)/(c) allocation logic, capital-account maintenance, buy-sell valuation, and phantom-income cash-flow patterns.
The 12 shipped SB-03 households have a combined gross income median of $336,037 (25th–75th: $314,928–$350,690). Median net worth is $2.95M with $1.29M liquid — much of the remainder is held in the partnership interest itself, valued under the buy-sell formula.
SB-01 has a single S-Corp shareholder with reasonable-comp and shareholder-basis surfaces. SB-03 has multiple partners with K-1 reporting, §704(b) allocation tests, capital-account maintenance, and buy-sell valuation — all surfaces absent from SB-01.
Yes. The household income profiles support modeling of distributive shares that exceed actual cash distributions, generating the partner-level §6654 estimated-payment problem of paying tax on undistributed income. Specific phantom-income amounts are downstream computations against the household data.
The corpus is structured so that partnership-interest value drives a large fraction of household net worth, consistent with buy-sell formula pricing under IRC §2703. Specific formula structures (book value, multiple-of-earnings, appraisal) are downstream modeling decisions rather than corpus attributes.
No. The shipped v3 corpus is frozen and not regenerable from current code (drift confirmed 2026-05-09). Improvements land in a future v4 release with per-archetype golden fixtures in CI.
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