partnership basis

Forum|Forum|5 years ago
January 11, 2021
3 replies
19 views

I am preparing a 1065 for a H&W LLC...............all revenue and expense run through their checkbook, except for their mileage deduction which is significant.

This is my first year for this client. On prior year return, since the mileage was an out-of-pocket expense, it was recorded as an increase to the capital account along with the deduction.

However, it was not recorded as an increase to partnership basis on the basis worksheet........I'm thinking that it should also be recorded as an increase to basis.

I'd appreciate any insight.

Thank you.

ProSeries Professional

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E

Ephesians3-14

Level 7

This is my first year for this client. On prior year return, since the mileage was an out-of-pocket expense, it was recorded as an increase to the capital account along with the deduction.

So Debit Mileage Reimbursement, Credit Capital account. OK. That's fine.

However, it was not recorded as an increase to partnership basis on the basis worksheet........I'm thinking that it should also be recorded as an increase to basis.

You would increase basis (b/c of the credit to the capital account)...but then guess what an expense does to partner's basis? You got it! It reduces basis. Sounds like a wash to me.

T

terrymedoAuthor

Level 2

thank you for your help.

On the prior year return, the partnership basis was reduced on the basis worksheet by the partnership taxable loss which includes the mileage deduction.

this led me to think that an offsetting increase to the basis should also be recorded to reflect the mileage expense paid out-of-pocket....which would then result in a wash

sjrcpa

Level 15

Side notes:

Is the LLC allowed to claim mileage deduction?

Why don't they have an LLC bank account?

The more I know the more I don’t know.

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