You'll need to issue your partner a 1099-MISC with their cut reported in box 1, 2 or 3 of that form. Which box it goes in, depends on the specific investment and what box it was reported to you in, on the K-1 you received. It also matters if that was a 1065 K-1, 1120 K-1 or 1120-S K-1. Otherwise, you pay tax on the entire amount. This "can" get tricky with TurboTax and I would highly advise you seek professional help. This would be especially called for if your state taxes personal income.
