Discussion:SE tax and Partnership K-1
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Discussion Forum Index --> Tax Questions --> SE tax and Partnership K-1
| 21 May 2008 | |
| Partner shows 20K loss on K-1 line 1, 5K guaranteed payments line 4, -15k line 14 total self employment earnings. If their is plenty of outside basis, presumably their will be no SE tax, due to the overall loss taken on the 1040 (15K).
Same situation except that the outside basis is zero. All numbers on K-1 still get reported the same. Question is " without the benefit of any available outside basis, do the guaranted payments reported on the K-1 represent 1040 taxable income and subject to SE ? | |
| 21 May 2008 | |
| Guaranteed payments are deducted on the partnership tax return as an expense. Therefore it is income to the partner.
With a -0- basis, the loss can be carried forward to future years. | |
RoyDaleOne (talk|edits) said: | 21 May 2008 |
| Derrick6 is this a real question or just wool-gathering? | |
| 21 May 2008 | |
| This is the real deal. In doing individual tax preparation I normally just take the info provided on the K-1 at face value and thats the end of it. In this case I am involved in trying to help sort things our for a partnership whose books are a "train wreck". I do not do Partnership returns, and frankly do not find the IRC references in may cases to be particularly helpfull.
My understanding is that line 14 on the K-1 is the total of lines 1 (ordinary income/loss) and Lines 4 (guaranteed payments). Assuming for arguments sake that these were the only entries. So using my examples above, adding the two together produces a loss which goes to Sch E and then 1040. That assumes however there is a basis available to take all or part of the loss. If there is not, then the loss does not flow to Sch E or the 1040 and is suspended. It leaves the question in my mind " does the guaranteed payment portion still need to flow to Sch E and the 1040. Blrgcpa seems to suggest that it does. If your pretty knowlegable in Partnership returns, I have some other issues which perhaps I can address with you via e-mail as opposed to the forum. Let me know. | |
