Level 2

SEP

Forum|Forum|4 years ago
April 6, 2022
2 replies
11 views

My client will contribute to a SEP. He is a partner (1065) with SE income and also has a schedule c for a separate business with a loss.

The loss limits his maximum SEP contribution - but my understanding of a SEP in an even partnership is that both partners would need to contribute the same amount. Does his limitation because of the loss potentially also limit his partners 2021 contribution?

This topic has been closed for replies.

sjrcpa

Level 15

Maybe or maybe not.

Is his Schedule C business affiliated with the partnership in any way?

If no, and the SEP Agreement was done properly, the SEP contribution can be based on the earned income from the partnership only and not include the Sch C loss.

In any partnership, the SEP contribution is based on the same percent of earned income for everyone. If your partners have Guaranteed Payments that are not even, when combined with Line 1 income, they will have different earned income upon which to compute the SEP contribution.

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

qbteachmt

Level 15

Is this the same issue you asked last week, here:

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/sep-contribution-for-partner-with-a-schedule-c-on-the-side/00/214755

You didn't need to keep asking as new topics; it's the same people. I will flag that one for deletion.

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