K-1 Partnership has S/E earnings Box 14, but my client did not actively participate, "general partner" box checked

[Just-Lisa-Now-]

If he thinks the K-1 is wrong, he needs to contact the Tax Matters partner to ask the preparer to correct or justify the reporting.

[Greta]

My client called the accountant who prepared the 1065 and K-1. He told her that "all partners are always subject to S/E", so no amended K-1 is forthcoming. I am not an expert on partnerships, but although she is a 25% owner of farm that was recently inherited from her father, she lives far away and has not participated in running the farm in any way. Does that qualify her as a limited partner? If that box is checked, then she does not pay S/E taxes, just income taxes.

[sjrcpa · Accepted solution]

If she's a General Partner the accountant is correct. For SE tax purposes it doesn't matter if you participate or not.

If it's a General Partnership (rarely seen these days) there are no limited partners.

[Greta]

What would make her a limited partner?

[sjrcpa]

A. The Partnership is a Limited Partnership.

B. Her interest is designated as being that of a Limited Partner. There is always a General Partner in a Limited Partnership.

Do you know what you have? Is it an LLC?

[abctax55]

What would make her a limited partner?

The partnership agreement would; if you don't have that - your client should have a copy.  And you could contact the preparer of the partnership return/K-1 and ask (or have your client do so).

[sjrcpa]

Keeping it all in one thread would lessen confusion.

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/siblings-inherited-a-fa...

[Greta]

I apologize. My Details box just doesn't open so I continued on another thread. It opened this time!