Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

Morning. Two questions with brief summary regarding partnership

Morning. Two questions with brief summary...
Morning.

Two questions with brief summary regarding partnership K1 flow through to the 2012 Form 1040

#1. Partner has a negative outside basis of ($322). 2012 K1 Box 1 ordinary loss of ($123k). Partner paid $71k for unreimbursed expenses. The $71k was additional vested capital in 2012 and the company took deduction on 2012 Form 1065.

Question #1 My tax softwared is allowing a loss on line 17, pg 1 of Form 1040 up to the $71k 2012 vested capital even though she has a $322 negative outside basis. Is this correct?

Question #2 Partner also paid $6k in unreimbursed expenses with arrangements with the partnership that she would not be paid back. The company did not take the $6k deduction on 2012 Form 1065.

I entered the info on an additional K1 screen as unreimbursed expenses and basis of $6k so that she could take the deduction on her 2012 Form 1040.
Show More
Show Less
Ask Your Own Tax Question
Answered in 47 minutes by:
10/1/2013
jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
Verified

Greetings,

 

Question #1 My tax softwared is allowing a loss on line 17, pg 1 of Form 1040 up to the $71k 2012 vested capital even though she has a $322 negative outside basis. Is this correct?

Presumably yes since the program should have used that additional contribution to allow the loss and then computed the basis with both the contribution and allowed loss in the basis total.

 

Question #2 Partner also paid $6k in unreimbursed expenses with arrangements with the partnership that she would not be paid back. The company did not take the $6k deduction on 2012 Form 1065.

Whether or not the partnership did or did not deduct anything this is still an additional capital contribution.

Caution may be needed not to record another (second) contribution for this amount when the partnership records the item.

 

Also, in order for a partner to claim unreimbursed expenses without reimbursement separately from the partnership accounting usually requires that is permitted by the partnership agreement. Many agreements may not allow or may require reimbursement of partnership expenses in the operating agreement.

For more detail see http://marcumllp.com/blog-tax-and-business/unreimbursed-business-expenses

"A partner cannot deduct expenses incurred on behalf of the partnership if the partnership would have reimbursed the partner for those expenses. The IRS has ruled that if, under the partnership agreement or practice, a partner must pay certain partnership expenses out of his or her own funds, he or she can deduct such expenses on the individual tax return."

 

Please ask if you need more discussion or clarification.

Thank you.

jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
Experience: I've prepared all types of taxes since 1987.
Verified
jgordosea and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 4 years ago


I just sent a reply through the question mode, so I apologize. This box did not come up on the first opening of viewing your answer!


 


You can void the additional question regarding this question if you received it.


 


However, I do have two other issues regarding this same topic and client. This client took 100 % of the K1 losses over and above her basis in prior years. She does not want to amend her returns. Going forward, the returns will be done correctly.


 


Should I file the 2012 return with the current year loss, knowing that she took additional losses in prior years above her basis?


Will a letter confirming my adamant suggestion to amend prior year returns protect me from IRS penalty as tax preparer?


 


Also, for some reason I have had to input my credit card information for each question. I am paying and have paid the monthly premium membership so the questions should show zero cost.


Any suggestions her?


 


Thank you!


 


Peg

Greetings,

You should contact support for any billing or site issues.
See http://ww2.justanswer.com/help
There are options on the right for various means to contact.

It is proper to list each new question in a new thread according to site rules. Please repost if you still need to ask a new question.

When I tried to access your other question it said that "Another Expert is currently working on this question,..."

The best way to get me to answer another question is to put my name in the question (as the other methods will release any question after a set amount of time and other experts may not be aware of your request).

Thank you for the opportunity to be of service.
Ask Your Own Tax Question
Ask jgordosea Your Own Question
jgordosea
jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3,161
3,161 Satisfied Customers
Experience: I've prepared all types of taxes since 1987.

jgordosea is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

3,161 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
I would like to open a business:to prepare tax returns for
Hello! I would like to open a business:to prepare tax returns for non resident,more exactly for students who come on a J1 -Visa ("Summer Work and travel" programme=where they work for aprox 3 months i… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I want form 1040 along with schedule A for years 2016 and
I want form 1040 along with schedule A for years 2016 and 2017 - NOTB eFile, just the old fashion forms that I complete with a pen,p. … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,785 satisfied customers
Is there a form to file with the IRS for tax periods that
Is there a form to file with the IRS for tax periods that have ran past the statute of limitations from the date of assessment … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Lev, I am still working on preparing the final return for
Good morning Lev, I am still working on preparing the final return for this particular client. Per your instruction, I converted the loan to the shareholder to paid in capital and on the balance sheet… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am preparing 6 years of tax returns, I have an IRS Notice
I am preparing 6 years of tax returns, I have an IRS Notice 2014-7 that states that states "IHSS wages received by IHSS providers who live in the same home with the recipient of those services are als… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Penalty for late filing of partnership LLC tax return, not
Penalty for late filing of partnership LLC tax return, not eligible for Rev Proc 84-35 relief because one of the partners is a foriegner… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,785 satisfied customers
2015 form 1040 Sch C had a loss of $1300 which reduced the
2015 form 1040 Sch C had a loss of $1300 which reduced the AGI in 2015. 2015 losses created a NOL and elected to carry forward. 2016 form 1040 Sch C has a net profit of $3800. The question here - does… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Accidentally sent IRS an unsigned copy of our 2016 form 1040
accidentally sent IRS an unsigned copy of our 2016 form 1040 and later received a form 3531 requesting a valid original signature. Should that returned signature be dated to the original submittal dat… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,067 satisfied customers
For a ny state partnership tax return, if you file an
For a ny state partnership tax return, if you file an extension but don't pay anything and then end up owing a lot. Do they still recognize the extension or do they charge a failure to pay penalty (fo… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Form 1120, cash basis. If Taxes paid to IRS are deductible,
Form 1120, cash basis. If Taxes paid to IRS are deductible, are refunds for overpayment the equivalent of income?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,067 satisfied customers
Adjusted individual tax return for 2014(Iowa),says no
Adjusted individual tax return for 2014(Iowa),says no response to letter of inquiry,disallowed health insurance. deduction.says my wife and I owe$600.00.she called # and was told to show proof of insu… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I filed my Form 1040, prepared on TurboTax and filed
I filed my Form 1040, prepared on TurboTax and filed electronically via TurboTax. I got nothing back and was told by the IRS that the refund was sent to a different bank transit number than the one sh… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,785 satisfied customers
A Form 1065 partnership return is being prepared for a
A Form 1065 partnership return is being prepared for a partnership whose General Partner is a single member LLC. In the Analysis of Net Income (Loss) section at the top of page 5, is the LLC's portion… read more
taxmanrog
taxmanrog
Master\u0027s Degree
768 satisfied customers
A taxpayer, Form 1040 Schedule C, is on the cash basis. The
A taxpayer, Form 1040 Schedule C, is on the cash basis. The average revenue for the last 5 years is $5,100,000. There is no inventory. The NAICS is 423600Can he remain on the cash basis?… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I am preparing a partnership tax return for 2016. The
I am preparing a partnership tax return for 2016. The partnership holds commercial rental property. one of the partners, 50%owner, passed away in April 2016 and left his interest to his spouse. i woul… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Deductible unreimbursed partnership expenses are deductible
Deductible unreimbursed partnership expenses are deductible on Line 28 of Schedule E. In this case the expense is a tractor with a cost of $ 25,000.00. This is a depreciable asset and would not normal… read more
Matthew Breecher
Matthew Breecher
President
MBA (Graduate Legal Studies)
286 satisfied customers
What are lines 15a & 15b on form 1040 for 2015 tax return? i
What are lines 15a & 15b on form 1040 for 2015 tax return? … read more
Matthew Breecher
Matthew Breecher
President
MBA (Graduate Legal Studies)
286 satisfied customers
Is a tax refund on a decedent's individual tax return
is a tax refund on a decedent's individual tax return includible in the decedent's estate (Form 706) AND/OR the decedent's estate income tax return (Form 1041)? … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,067 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x