Limited Partnership is Issued a 1099-R

[sali]

I am working on a 1065 return for a limited partnership. This partnership Federal ID number was issued a 1099-R marked as a normal distribution. The issuer is an insurance company. How/where do I report the 1099-R on the Form 1065? I don't want this income to be reported as Self Employment income. The partners are a husband and a wife.

Thanks.

[Jiggers]

1099R to partnership?

I am working on a 1065 return for a limited partnership. This partnership Federal ID number was issued a 1099-R marked as a normal distribution. The issuer is an insurance company. How/where do I report the 1099-R on the Form 1065? I don't want this income to be reported as Self Employment income. The partners are a husband and a wife.

Thanks.

Why would there be a distribution to a partnership reported on a 1099R?

[sali]

This LP is set up to own insurance policies for husband. Husband and wife are partners. I believe this 1099-R is a result of cashing in a policy. There is a $47,000 gross distribution (box 1) with the taxable amount equal to $20,000 (box 2a) and box 5 has $27,000. The address on 1099-R the partnership name, then on line 2 of the name/address "RE: Husband's Name". Because of the way the partnership is set up all of this should flow through and be taxable on the joint individual return of the husband and wife.

[Bees Knees]

I would enter it on line 11 of Schedule K (page 4 of the 1065), and then have it flow through 100% to the husband's K-1, line 11, Code F. Then attach an explanation to the K-1 explaining that it is a 1099-R taxable to the husband, since that is what it is for and the husband's name is also on the 1099-R. Do not include any of the income in SE taxable income on line 14 of the Schedule K and K-1.

Side note: I see no reason whatsoever to own insurance policies inside a limited partnership, if the policy is going to list one of the partners as the beneficiary. Sounds like someone is wasting allot of tax preparation fees on something that serves no purpose.

[AuditorTurnedGood]

I agree with Bees

The only reason I know of to stick life insurance policies in any kind of entity is to avoid inclusion in the estate by using an irrevocable life insurance trust.

[sali]

Thanks so much for your help. I'll pass the side note on to the decision makers. This is a new client for us.