Is it possible to form a partnership between myself and my S corporation?

This is actually a really good question about entity structuring. While it's technically possible to form a partnership between yourself and an entity you own (like your S corporation), it creates some complex tax issues you should be aware of. The IRS generally recognizes partnerships between individuals and entities, but they look closely at arrangements where the same person effectively controls both sides of the partnership. This could potentially trigger scrutiny under substance-over-form or step-transaction doctrines. For tax purposes, you'd need to file Form 1065 for the partnership, which would issue K-1s to both you personally and to your S corporation. Your S corp would then need to incorporate its K-1 income on its 1120S, which ultimately flows through to you on your personal Form 1040 via a separate K-1 from your S corporation.

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I've seen people try this S corp/partnership arrangement and it usually doesn't end well. The IRS tends to look at the substance over form. Since you already own 100% of the S corp, and would own some percentage of the partnership, they might view it as a circular arrangement without real economic substance. If you're looking for income splitting, have you considered bringing in family members as legitimate minority shareholders in your S corp? That can be a cleaner way to distribute income if done properly.

I think a better solution might be a "brother-sister" corporate structure where you create a second, separate entity rather than a partnership between yourself and your S corp. My accountant set this up for me last year - I have an S corp for my consulting business, then a separate LLC taxed as a partnership that handles all our intellectual property and equipment. The S corp pays the LLC licensing fees, which helps optimize our total tax situation.