Is 1065 K-1, line 1, always subject to SE tax, even for limited partners?

[Accountant-Man]

Why does Ordinary income, line 1 of 1065 K-1, get taxed as S/E income even when it's a Limited Partner?

Do not check Material Participation.

Even zero as SE income still creates SE tax.

How to get it right?

[sjrcpa]

Not always. Yes if they participate (work) in the business. No if they are a silent investor.

Are you preparing the 1065? Or dealing with a K-1 received?

[TaxGuyBill]

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@Accountant-Man wrote:

Even zero as SE income still creates SE tax.

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Are you referring to line 14 of the K-1?  That is what triggers SE tax.

[Accountant-Man · Accepted solution]

Sorry, I had an identical entry on the SE earnings w/s. My mistake, it is ok.