What is the difference between a 1099-INT and a K-1 in simple terms?

A 1099-INT says 'we paid you this much interest', arrives in January, and you copy the number onto your return. A K-1 says 'you own a slice of a partnership and here is your share of every kind of income and expense it had', arrives whenever the partnership finishes its own return, often in late summer, and you may have to file in other states, watch for phantom income, and track your basis. The 1099-INT is a receipt; the K-1 is a set of accounts.

Which investments send a 1099-INT?

Debt paid directly to you by a business or a vehicle: Regulation Crowdfunding bonds and notes (SMBX, Honeycomb, Climatize, Steward), Regulation A bonds issued by a platform subsidiary (Worthy), marketplace structured notes (Percent), and short-term notes at platforms that also run partnership deals (the debt side of Willow Wealth). Groundfloor's notes report on the related Form 1099-OID because the interest is accrued as original issue discount. Interest of $10 or more triggers the form; below that you still owe the tax.

Which investments send a K-1?

Anything structured as an LLC or LP taxed as a partnership: farmland LLCs (AcreTrader, Harvest Returns, FarmTogether's crowdfunded deals), litigation-finance funds (Legalist, LexShares), oil and gas fund LLCs (EnergyFunders), feeder funds into private equity and credit (iCapital, Moonfare, UpMarket, Securitize's ACRED and Hamilton Lane feeders), pre-IPO SPVs (EquityZen), Masterworks' per-artwork entities, tokenized fund interests such as Ondo's OUSG, and the private-placement side of RealtyMogul, CrowdStreet and Willow Wealth. One platform can mean many K-1s: a Masterworks investor receives one per artwork held.

Why do some real estate platforms send a 1099-DIV instead?

Because the vehicle is a REIT, a registered fund or a corporation rather than a partnership. Fundrise's three registered funds, Arrived's nine entities, Concreit's Reg A vehicles, RealtyMogul's REITs, Eagle Point and Energea's C-corp portfolios all report on 1099-DIV. So does Ark7, because each of its series is taxed as a C corporation. A 1099-DIV carries boxes the others lack: nondividend distributions (return of capital, which reduces your basis rather than being taxed now) and Section 199A qualified REIT dividends, which qualify for the 20 percent pass-through deduction. Eagle Point's 2025 distributions were about 55 percent return of capital, which is the kind of split the form makes visible.

When do K-1s arrive, and why so late?

A partnership return is due March 15, with an automatic extension to September 15, and the K-1 cannot be issued until the partnership's own accounts are closed, which for a fund holding other funds means waiting on their K-1s first. Many alternative-investment K-1s therefore arrive between April and September, after the April 15 individual deadline, so K-1 investors routinely extend their own returns. A 1099-INT is due to you by January 31 and, on the platforms in this cluster, is generated automatically from the payment ledger. AltStreet's platform scoring records each platform's K-1 delivery track for this reason.

What is phantom income on a K-1?

Taxable income allocated to you that was not paid to you. A partnership may earn interest or gains and retain the cash for reserves, reinvestment or debt service; you still owe tax on your share that year. A 1099-INT cannot do this: it reports interest actually paid or credited. On a fund with a long deployment period or a reserve policy, the K-1 can produce a tax bill in a year with no distribution at all, which is one reason K-1 investments belong in accounts where the cash to pay the tax exists.

What does a K-1 mean for an IRA?

Two things. Unrelated business taxable income: if the partnership runs an operating business or uses debt to finance its investments (leveraged real estate, many credit funds), your IRA's share is UBTI, reported on the K-1 (box 20, code V), and the IRA must file Form 990-T and pay tax if it exceeds $1,000 gross in the year. And custodian mechanics: the IRA custodian, not you, is the partner of record, must accept the K-1, and often charges for holding partnership interests. A 1099-INT investment held in an IRA produces neither problem; the interest is simply sheltered.

How is a defaulted bond or a worthless investment treated on each form?

A bond that stops paying stops generating 1099-INT income; nothing on the form records the loss. If the debt becomes wholly worthless, an individual claims a nonbusiness bad debt as a short-term capital loss (Form 8949), subject to the $3,000 annual net capital-loss limit, and only in the year it became wholly worthless; a missed payment alone does not establish that, and Worthy Peer Capital II holders being told their bonds were 'worthless' in February 2026 is the kind of statement that does. On a K-1, losses are allocated as they occur and reduce your basis, subject to passive-activity and at-risk limits, and a final K-1 marked 'final' on dissolution closes out the capital account; the loss on the partnership interest itself is generally capital.

1099-INT vs K-1

Tax Treatment & Optimization

Definition

Form 1099-INT and Schedule K-1 are the two ends of the tax-reporting spectrum in alternative investments, and which one an investment sends you is decided by its legal form, not by the platform. A 1099-INT is an information return from a payer that paid you $10 or more of interest in the year; it arrives by January 31, states the interest in one box, and you report it as ordinary income at your marginal rate with no basis to track and no state filing beyond your own. It is what a bond, note or loan issued directly by a business or a platform vehicle produces: SMBX bonds, Honeycomb notes, Worthy bonds, Percent notes and Steward loans all report on it. A Schedule K-1 (Form 1065) is a partnership's statement of your share of everything it earned and spent, allocated to you by character: interest, dividends, rental income, short- and long-term capital gains, depreciation, and unrelated business taxable income for an IRA, with a capital account and, where the partnership owns property in other states, state-sourced income that may require nonresident returns. It arrives only after the partnership files, which is due March 15 but routinely extended to September 15, and it taxes you on your allocated share whether or not cash was distributed. It is what an LLC or LP taxed as a partnership produces: farmland LLCs on AcreTrader, litigation-finance funds, feeder funds on iCapital and Moonfare, and Masterworks' per-artwork entities. Between the two sit 1099-OID (interest accrued on a discount instrument, Groundfloor's notes), 1099-DIV (dividends from a REIT, a registered fund or a series taxed as a corporation, with its own return-of-capital and qualified-REIT-dividend boxes) and 1099-B (sale proceeds on a secondary market).

Why it matters

The tax form is the last thing a platform's marketing mentions and the first thing that tells you what you actually bought. A 1099-INT means you are a creditor: someone owed you interest and paid it, the income is ordinary, the paperwork is one line, and the timing is January. A K-1 means you are an owner of a share of an entity: its income keeps its character on the way to you (which can be favorable, since long-term gains and qualified dividends pass through as such), its debt can make your IRA a taxpayer, its properties can make you a nonresident filer in states you have never visited, its retained earnings can be taxed to you before you see them, and its paperwork arrives on its schedule rather than the IRS's. Neither is better in the abstract; the K-1's complexity is the price of pass-through treatment, and the 1099-INT's simplicity is the price of ordinary-income rates. What matters is knowing before you invest, because the form follows the legal structure and the structure is on the offering document: 'bonds' and 'notes' produce 1099s, 'LLC membership interests' and 'LP interests' produce K-1s, and 'shares' of a REIT or a fund produce 1099-DIVs. Across the platforms AltStreet reviews the split is roughly even, and several platforms produce different forms for different products, which is the case where reading the form matters most.

Common misconceptions

•The platform does not choose the form; the structure does. A platform that sells notes and also runs partnership deals sends both, per product.
•A K-1 is not 'worse' tax treatment. It passes income through by character, so long-term capital gains and qualified dividends keep their rates; a 1099-INT is all ordinary income.
•A 1099-INT below $10 does not mean the interest is tax-free. The payer is excused from the form; you are not excused from the income.
•Distributions are not income on a K-1, and income is not distributions. You are taxed on your allocated share; cash may be more (return of capital) or less (phantom income) than that.
•A missed bond payment is not a deductible loss. A nonbusiness bad debt is deductible only when wholly worthless, as a short-term capital loss, in that year.

Technical details

Form 1099-INT and its relatives

1099-INT: interest paid or credited of $10 or more (box 1); also early-withdrawal penalties, US Treasury interest (box 3, state-exempt) and tax-exempt interest (box 8); due to the recipient by January 31 and to the IRS by the end of February or March. Reported on Schedule B if total interest exceeds $1,500; taxed as ordinary income.

1099-OID: original issue discount accrued on an instrument issued below face or with deferred interest, taxable as it accrues whether or not paid; Groundfloor's limited recourse obligations and notes report here.

1099-DIV: dividends from corporations, REITs and registered funds. Box 1a total, 1b qualified, 2a capital gain distributions, 3 nondividend distributions (return of capital, reduces basis), 5 Section 199A dividends (qualified REIT dividends eligible for the 20 percent deduction). Fundrise, Arrived, Concreit, RealtyMogul's REITs, Eagle Point, Energea's C-corp portfolios and Ark7's series report here.

1099-B: proceeds from sales through a broker or a secondary market; Rally's collectibles trades and Ark7's trading platform generate them; the investor computes gain against basis.

1099-MISC or none: revenue-share or royalty payments and some direct-share transfers fall outside interest and dividends; Forge and Hiive issue nothing on a direct secondary purchase, and the issuer or transfer agent does.

What none of the 1099s carry: your basis, your losses, or any state allocation; those are yours to track.

Schedule K-1 (Form 1065)

Issued by every entity taxed as a partnership (multi-member LLCs and LPs that have not elected corporate treatment) to each partner, reporting the partner's distributive share by line: ordinary business income (1), rental real estate (2), interest (5), dividends (6a and 6b), royalties (7), net short-term and long-term capital gains (8 and 9a), Section 1231 gains (10), other income (11), Section 179 and other deductions (12 and 13), self-employment earnings (14), credits (15), foreign transactions (16), AMT items (17), tax-exempt income and nondeductible expenses (18), distributions (19), other information including UBTI (20, code V) and Section 199A (20, code Z).

Capital account: beginning balance, contributions, allocated income or loss, distributions, ending balance, on the tax basis since 2020; the investor's outside basis governs whether losses are deductible and distributions taxable.

Timing: the partnership return is due March 15 (extension to September 15); the K-1 issues with it. Tiered structures (feeders holding underlying funds) wait on the lower tier's K-1, which is why feeder-fund K-1s cluster in August and September.

State: a partnership with income sourced to a state must report each partner's share; nonresident partners may owe returns in those states, or the partnership may file composite returns or withhold; AcreTrader's farm LLCs sit in Illinois, Arkansas, California, Washington, Nebraska and elsewhere, and each state's rules apply.

Passive activity and at-risk rules: losses from a limited partner interest are generally passive and deductible only against passive income, carried forward otherwise.

Final K-1: on dissolution or full redemption the K-1 is marked final; the capital account closes and the partner recognizes gain or loss on the interest.

What each form means for the return you keep

Rate: 1099-INT income is ordinary at up to 37 percent federal plus the 3.8 percent net investment income tax where it applies; an 11 percent coupon nets roughly 6.9 percent to a top-bracket taxpayer before state tax. K-1 income keeps its character: long-term capital gains at up to 20 percent, qualified dividends likewise, rental income ordinary but often sheltered by depreciation.

Depreciation: a K-1 from a property partnership can show taxable income well below cash distributed because of depreciation, deferring tax until sale (with recapture then); a 1099-DIV from a REIT shows the same effect as return of capital in box 3.

Deductions: Section 199A gives a 20 percent deduction on qualified REIT dividends (1099-DIV box 5) and on qualified business income from pass-throughs (K-1 box 20 code Z), through 2025 under current law; interest on a 1099-INT gets no such deduction.

Losses: a defaulted bond becomes a short-term capital loss only when wholly worthless; partnership losses flow through as incurred, subject to basis and passive limits.

Cost of compliance: a K-1 investment usually means an extended return, possibly nonresident state returns and, in an IRA, a Form 990-T; at the position sizes typical of retail platforms ($100 to $10,000) the preparation cost can exceed the tax saved.

Which platforms issue which form, from AltStreet's reviews

1099-INT: SMBX (Small Business Bonds), Honeycomb Credit (notes), Climatize (notes), Steward (loans), Worthy (Reg A bonds, issued by the issuer or its agent), Percent (marketplace notes, 1,052 of 1,067 deals at the May 2026 read), Willow Wealth short-term notes; Mainvest delivered investor tax documents electronically while operating and none after it ceased.

1099-OID: Groundfloor (limited recourse obligations and notes).

1099-DIV: Fundrise (three registered funds), Arrived (nine entities, no K-1s), Concreit (two Reg A vehicles), RealtyMogul (REITs), Eagle Point, Energea (Portfolios 2, 3 and 5, C-corp election), Ark7 (each series taxed as a C corporation; 1099-B on its trading platform), Burford Capital (dividends; Schedule D on stock sales), Securitize's ArCoin.

Schedule K-1: AcreTrader (farm LLCs), Harvest Returns, EnergyFunders (fund LLCs), Legalist and LexShares (litigation funds), Masterworks (one per artwork or Vault entity), Moonfare (Delaware LP wrapper), iCapital (feeder funds, incorporating underlying fund items), UpMarket (feeder and SPV interests), EquityZen (SPV and fund interests; direct share purchases produce none), Ondo Finance (OUSG), CrowdStreet (direct deals and LP funds), RealtyMogul and Willow Wealth (private-placement SPVs), FarmTogether (crowdfunded and TIC deals), Securitize's ACRED and Hamilton Lane feeders, Rally's RSE Innovation entity.

Issuer- or instrument-dependent, no platform-level form: DealMaker, tZERO (brokerage forms from tZERO Securities), Polymesh, EnergyNet, Netcapital (C-corp stock produces no annual form; events on sale or worthlessness), Landa (a 1099 per its help center, forms actually issued not established), Pacaso (per each LLC's operating agreement), Forge and Hiive (direct transfers; the issuer or transfer agent reports).

Offshore or not applicable: Backed, Maple Finance, KlimaDAO, and the carbon-registry and offset venues, which sell no US security.

Read across: the same platform can appear on three lines. RealtyMogul sends 1099-DIV on its REITs and K-1s on its private placements; Willow Wealth sends K-1s, 1099s and 1099-DIVs by product; Securitize's form depends on the vehicle. The offering document, not the brand, decides.

How to use the form before you invest

Find the structure sentence in the offering document: 'bonds', 'notes', 'promissory notes' mean a 1099-INT or 1099-OID; 'membership interests', 'limited partnership interests', 'units' of an LLC or LP mean a K-1; 'shares' of a REIT, series LLC electing REIT status, or registered fund mean a 1099-DIV.

For a K-1 investment, ask the platform when last year's K-1s were delivered; a platform that delivered in March is a different proposition from one that delivered in September, and AltStreet's platform scores record the track.

For a K-1 investment in an IRA, ask whether the entity generates UBTI (leverage, operating income) and whether your custodian accepts the interest and at what fee; for small positions the answer usually settles the question.

For a 1099-INT investment, plan for ordinary income at your marginal rate on the actual amortizing cash flows, and note that a default produces no form and a loss only at worthlessness.

For any investment, keep the platform's tax documents yourself: SMBX makes 1099-INTs downloadable for ten years, but Mainvest's investors lost access when the portal closed, and a K-1 issued by a dissolved fund may be the last document its administrator ever produces.

Frequently asked questions

What is the difference between a 1099-INT and a K-1 in simple terms?: A 1099-INT says 'we paid you this much interest', arrives in January, and you copy the number onto your return. A K-1 says 'you own a slice of a partnership and here is your share of every kind of income and expense it had', arrives whenever the partnership finishes its own return, often in late summer, and you may have to file in other states, watch for phantom income, and track your basis. The 1099-INT is a receipt; the K-1 is a set of accounts.
Which investments send a 1099-INT?: Debt paid directly to you by a business or a vehicle: Regulation Crowdfunding bonds and notes (SMBX, Honeycomb, Climatize, Steward), Regulation A bonds issued by a platform subsidiary (Worthy), marketplace structured notes (Percent), and short-term notes at platforms that also run partnership deals (the debt side of Willow Wealth). Groundfloor's notes report on the related Form 1099-OID because the interest is accrued as original issue discount. Interest of $10 or more triggers the form; below that you still owe the tax.
Which investments send a K-1?: Anything structured as an LLC or LP taxed as a partnership: farmland LLCs (AcreTrader, Harvest Returns, FarmTogether's crowdfunded deals), litigation-finance funds (Legalist, LexShares), oil and gas fund LLCs (EnergyFunders), feeder funds into private equity and credit (iCapital, Moonfare, UpMarket, Securitize's ACRED and Hamilton Lane feeders), pre-IPO SPVs (EquityZen), Masterworks' per-artwork entities, tokenized fund interests such as Ondo's OUSG, and the private-placement side of RealtyMogul, CrowdStreet and Willow Wealth. One platform can mean many K-1s: a Masterworks investor receives one per artwork held.
Why do some real estate platforms send a 1099-DIV instead?: Because the vehicle is a REIT, a registered fund or a corporation rather than a partnership. Fundrise's three registered funds, Arrived's nine entities, Concreit's Reg A vehicles, RealtyMogul's REITs, Eagle Point and Energea's C-corp portfolios all report on 1099-DIV. So does Ark7, because each of its series is taxed as a C corporation. A 1099-DIV carries boxes the others lack: nondividend distributions (return of capital, which reduces your basis rather than being taxed now) and Section 199A qualified REIT dividends, which qualify for the 20 percent pass-through deduction. Eagle Point's 2025 distributions were about 55 percent return of capital, which is the kind of split the form makes visible.
When do K-1s arrive, and why so late?: A partnership return is due March 15, with an automatic extension to September 15, and the K-1 cannot be issued until the partnership's own accounts are closed, which for a fund holding other funds means waiting on their K-1s first. Many alternative-investment K-1s therefore arrive between April and September, after the April 15 individual deadline, so K-1 investors routinely extend their own returns. A 1099-INT is due to you by January 31 and, on the platforms in this cluster, is generated automatically from the payment ledger. AltStreet's platform scoring records each platform's K-1 delivery track for this reason.
What is phantom income on a K-1?: Taxable income allocated to you that was not paid to you. A partnership may earn interest or gains and retain the cash for reserves, reinvestment or debt service; you still owe tax on your share that year. A 1099-INT cannot do this: it reports interest actually paid or credited. On a fund with a long deployment period or a reserve policy, the K-1 can produce a tax bill in a year with no distribution at all, which is one reason K-1 investments belong in accounts where the cash to pay the tax exists.
What does a K-1 mean for an IRA?: Two things. Unrelated business taxable income: if the partnership runs an operating business or uses debt to finance its investments (leveraged real estate, many credit funds), your IRA's share is UBTI, reported on the K-1 (box 20, code V), and the IRA must file Form 990-T and pay tax if it exceeds $1,000 gross in the year. And custodian mechanics: the IRA custodian, not you, is the partner of record, must accept the K-1, and often charges for holding partnership interests. A 1099-INT investment held in an IRA produces neither problem; the interest is simply sheltered.
How is a defaulted bond or a worthless investment treated on each form?: A bond that stops paying stops generating 1099-INT income; nothing on the form records the loss. If the debt becomes wholly worthless, an individual claims a nonbusiness bad debt as a short-term capital loss (Form 8949), subject to the $3,000 annual net capital-loss limit, and only in the year it became wholly worthless; a missed payment alone does not establish that, and Worthy Peer Capital II holders being told their bonds were 'worthless' in February 2026 is the kind of statement that does. On a K-1, losses are allocated as they occur and reduce your basis, subject to passive-activity and at-risk limits, and a final K-1 marked 'final' on dissolution closes out the capital account; the loss on the partnership interest itself is generally capital.