Form 1065 - H/W LLC expenses

[Beth]

I need some help with this please

Husband and wife have a small part time business (LLCin MN) operating out of their home.

Their office and shop is in the home in a dedicated area excusively for that purpose.

I am preparing a 1065. Do I take their business phone line, office supplies under line 20?

Also, can they take a % of their electricity, taxes, etc here also??

Thanks!

[JG EA]

TTB SB 4-7 discusses this type of thing if you take OIH, etc. for Unreimbursed Partnership Expenses. If they paid for these things out of their personal account (and in agreement) it would make sense to put on E-2 as it explains. Check out your program for Form 8829 and it probably has an option to use as UPE.

Or you could take all the partnership expenses directly by paying them from the partnership account or reimbursing the partners.

[John of PA]

Must be in writing

To deduct Unreimbursed Partnership Expenses on the 1040 (goes on Sch E page 2) the Partnership (or LLC) agreement must state in writing that the partner is required to incurr these type expenses, otherwise, the expenses must be deducted on the 1065.

[Snaggletooth]

Husband\Wife Qualified Joint Venture

Husband and wife have a small part time business (LLCin MN) operating out of their home.

Beth, have you considered filing under the new (2007) husband/wife qualified joint venture?
If you have the Small Business Version, look under SB4-3. Husband and wife can skip the rigid 1065 preparation and file two separate Schedule Cs, with a proportionate recognition of all income/expense line items.

[joanmcq]

But its an LLC, so may not qualify, depending on whether you consider the IRS analysis to be binding.