Kimmyjack
Level 4

I would agree with you.  I have a new client who is listed as a limited partner on the tax return and is in a limited partnership.  He is 100% active in the business.  So by definition, he is not a limited partner, but is shown as such in the legal documents.  Based on research with court cases, the IRS has won where a person is involved in the business, but listed as a limited partner and not paying self-employment taxes.  I have received K-1's on different clients where they are listed as limited partners, but still have self-employment taxes.  Based on my research, I believe he should be paying self-employment taxes because of his involvement, but I do not want to change his status on the return as a limited partner.  It doesn't appear that Proseries will allow you to do that unless you override or make him a general partner.  

I was hoping to avoid explaining all that with my first comment......"I am not asking if a limited partner is subject to self-employment tax"., but rather if the system will allow you to do it in some way.

If you have research to the contrary of what I listed, please share.

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