Partner's Business Use of A Home

 

Partners report expenses for the business use of a home as unreimbursed partnership expenses on Part II,  Line #28, column (h), Schedule E, Form 1040.

Partners do not use Form 8829, Expenses For Business Use Of A Home, for a partner's expenses.

See a detailed discussion of Partner's Unreimbursed Expenses, article.

 

This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net

The Value of a Deal

I recently saw a great sale on watches. Not those offered on the streets in some cities, but an unusually good deal in any event. I did not really need another watch, but I fell for the deal, and purchased one. It had the main watch dials as well as two smaller dials and a few added controls on the side. It took a while to get the band sized to fit with the help of the seller. I actually could not see the smaller dials without my glasses, which I did not have in my possession at the time of sale. When I got home and had some time I looked closer and determined that the two small dials and controls were decorative only, without functionality at all. The next day I returned to the seller and asked about this and he responded: “what do you expect for that price?”  He was right. The deal was just that…

He also took the watch back and returned my money. OK seller…of TRASH…and I should have knowm better…

How about your products and/or service?

 

Steve Koenig, SCORE Counselor

Visit us at: www.scoresouthflorida.net

 

 

Un-reimbursed Partner Expenses

 

Under the general rule, a partner in partnership is NOT allowed to deduct un-reimbursed partnership expenses (partnership business expenses paid by the partner that the partner is not reimbursed for) on his/her individual tax return.

An exception applies when there is a provision in the partnership agreement requiring the partner to pay the specific expenses.

Each partner's Schedule K-1 should indicate in Box 20, Code Z along with a statement that the amount is for “UPE”.

Allowable expenses are deducted on Part II, Schedule E, Form 1040 of the partner's individual income tax return.

Report allowable un-reimbursed partnership expenses as a separate item on Line 28, Schedule E. Enter “UPE” as the name of the line item, then list the amount on (h) of line 28.

The “UPE” amount will be deducted from partnership income and will also reduce the net income subject to self-employment tax.

Audit Tip:

Include the requirement that the partners pay the specific expenses in the written partnership agreement to help ensure deductibility in case of an IRS Audit. Also include wording that the partnership will not reimburse the partners for the expenses.

This article was written by Donald M. Scherzi, CPA, CFP, LLC
Mike Lupo, SCORE Counselor
Visit us at: www.scoresouthflorida.net

Marketing tip of The Month

#11 THE OPENING KICKOFF

Start every business day, and I mean EVERY business day, by making TWO cold calls. It’s a great, proven tactic. You’re bound to meet customers who had a great day themselves the day before and are ready to do business with you. But it’s got to be a habit. Every business day.

Martin Kahn, SCORE Counselor

Visit us at: www.scoresouthflorida.net