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On Schedule K-1 (Form 1065), I'm confused on whether I fill out the "Part III" section. In the instructions from the IRS (page 24, last paragraph on page forward), it is unclear to me on whether it is saying that this is filled out only if the partner's allocations are different from the amounts listed on the 1065 form.

If it is required, and the partner's share is just 50%, do I simply take the 1065 values, and fill in 50% of those amounts for this Part III section on the K1?

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Yes, you are correct. In Part III of the K-1, you enter the pro-rate share of income (or losses). You will need to prepare one K-1 for each partner. If the partnership had $50,000 in income, and the partner's share is 50%, enter $25,000 on line 1.

Lines 2 - 20 are reserved for special types of income that may need special treatment on a partner's personal return.

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