qbteachmt
Level 15

"a while back he took on a partner/investor"

You need to clarify what "a while back" really is: which specific tax year? Did this all happen in 2023, for example?

You call this a "partner/investor" indicating it was not considered a loan to be repaid, nor was there to be any sort of cycle or payment(s) due at any specific interest rate. Is that true?

"just entering the 80k expense without insight"

What you have is the difference between Expense and Expenditure. An expense is when something like rent or printer paper or electricity is paid for and Poof! The thing that got paid for was all used up. An expenditure is when cash flow has happened to service debt, to buy new assets, or otherwise to make an investment. What the $80k is, is some sort of purchase of the portion of the business, which means it is more of an asset cost (investment) and not Expense.

When this was audited in 2022, how'd that go? If that is a year there were partners, the auditor would have expected a partnership return, not a Sole Proprietorship Schedule C attached to an individual's personal tax return. Is a partnership return what you filed for State, but not a partnership 1065 for Fed?

"Shall i enter guaranteed payment to partner or partner buyout. or am i completely off."

A Sched C never has partners. There is no provision for guaranteed payments on Sched C.

Did someone mentor you through the audit?

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