Partnership and Auto

[S T]

I am having a "challenge" or "diffiuclty" in trying to understand this

Partnership - two Partners 80/20

80% Partner wants all of his vehicle expense recorded and taken on the Partnership Return (would be auto loan payment, gas, insurance, repairs, etc)

Nothing for the 20% partner.

Accountable Plan or Non Accountable Plan??? OR suggestions

If Accountable Plan - it would be recorded in QB as auto expense and ??? (what account is the offset)

If Non Accountable Plan - it would be recorded in QB as Distribution to Partner and then Partner would take a Biz Percentage under Schedule E - Unreimbursed Partner Expenses (UPE) ???

Can someone please make this easy for me - so I can reflect properly in QB and also on the Tax Return - and then explain to the Client.

Thanks

Sandy

[Jesse]

Thinking out loud...before my coffee is done......

I am having a "challenge" or "diffiuclty" in trying to understand this

Partnership - two Partners 80/20

80% Partner wants all of his vehicle expense recorded and taken on the Partnership Return (would be auto loan payment, gas, insurance, repairs, etc)

Nothing for the 20% partner.

Accountable Plan or Non Accountable Plan??? OR suggestions

If Accountable Plan - it would be recorded in QB as auto expense and ??? (what account is the offset)

If Non Accountable Plan - it would be recorded in QB as Distribution to Partner and then Partner would take a Biz Percentage under Schedule E - Unreimbursed Partner Expenses (UPE) ???

Can someone please make this easy for me - so I can reflect properly in QB and also on the Tax Return - and then explain to the Client.

Thanks

Sandy

Accountable Plan or Non Accountable Plan??? OR suggestions


If Non Accountable Plan - I think to record it as an unreimbursed business expense is the correct way to take it, but the partnership agreement must state the partners are personally responsible for their own business mileage. As you said, it would be recorded in QB as Distribution to Partner and then Partner would take a Biz Percentage under Schedule E - Unreimbursed Partner Expenses (UPE).

If the auto is not titled in the name of the Partnership can the have an Accountable Plan? If they are able to have an accountable plan, can the partner turn in actual receipts for company reimbursement or get a company credit card and make all actual charges on the card and paid by the Partnership?

[Uncle Sam]

Partnership and Auto

Wouldn't those auto expenses be treated as specially allocated distributions to the 80% partner? And the business related portion be specially allocated deductions?

[Gretel]

Here are my 2 cents. I believe accountable plan rules apply to employees only.

If both partners agree that the partnership pays the auto expenses for the 80% partner then it needs to be in the Operating Agreement/Partnership Agreement. If car is titled in partnership's name (which I doubt), then all expenses can be paid are directly by partnership (This assumes 100% biz use to have no further issues).

If car is titled in 80% partner's name then he has to submit an invoice or some kind of report to get paid back. Again if 100% biz use no problems.

If the car is not used 100% for biz then he needs to pay some prorated expenses back to partnership.

Above discussion assumes actual expenses are taken. However, the partnership could use mileage or reimburse SMR to partner.

If the 20% partner does not want to have his profit affected by the 80% partner's auto expenses, then we have a different animal. Partner only option then is to take auto expenses on pg. 2 of Sch. E. Can only do this if Partnerhship Agreements requires him to pay these expenses. Again, actual expenses or SMR possible.

[S T]

Thanks everyone for your posts and thoughts!
I believe we can initiate an Accountable Plan and will make all reporting easier, that also makes the partner's responsible for the record keeping - which I really like.
We all know how difficult it is to receive the "Partner's expenses" to take as UPE on Schedule E page 2.

Many Thanks

Sandy

[Gary2]

As I cram for SEE Part 2, I can't help but think they need more questions like this and some other recent partnership/LLC/corporation questions posted here, and fewer of the sort that are normally answered by computers or following line by line instructions.