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My client is a limited partner in a partnership. They have guarantee payments as well as unreimbursed mileage. When I enter the mileage and other deductions as UPE, it does not reduce self employment taxes. I thought this was allowed against SE tax. Can someone provide insight on the rules here. They do have a positive capital basis.
Also, they have a sec 179 deduction on form K-1. The spouse has negative farm income. Is sec 179 limited by the joint income or should I be changing something on 4562 to allow the deduction. The sec 179 deduction is less than their basis in the partnership and is less than the guarantee payment.
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taxiowa
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Also on the K1 worksheet right after line 12 where you enter the 179 deduction, there is a quickzoom. Tap that sucker and then you scroll down just a bit to the question "Check this box to reduce self-employment income (guaranteed payments) by UPE and 179 deduction?" A yes answer to this question will allow milage to reduce self-employment tax.
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Be aware that the partnership agreement needs to state that such expenses will not be reimbursed.
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searched and searched to find where to deduct UPE from the SE tax calculation thank you !!
