Schedule K?

Question

Why are partnerships and S corporations required to separately state certain items on their Schedule K rather than combining these items with the organization’s operating profit or loss?

Answer 1

The separately stated items are those that might not be treated the same on each shareholder's personal return.  Some examples are charitable contributions, tax credits, foreign tax, or personal expenses paid for a shareholder.  Some shareholders may be able to use these deductions & others may not, or they may be able to use them indifferent ways.  

Separately stated items are those items that need to be treated differently by each shareholder based on the rest of their tax situation.

Answer 2

because that schedule divies it up per participant/shareholder/owner

there it illustrates the factors that will flow through to each person's personal return