K-1 and Office in Home

[Openfire]

I am trying to figure the best method for claiming Office In Home for a Partnership agreement using the K-1. This is the only office for this business, it is unreimbursed expenses, and is deemed necessary for the business. My research thus far has suggested adding a Sched. "E" entry referencing the K-1, or using the K-1 "Other Expenses" and noting them as supplemental. In conjunction with the Supplemental, I would keep a copy of Pub 587 worksheet denoting the deductions. I will have a mortgage interest that would then be portioned for business use of home and also schedule A. Utilities as indirect, etc.

My question: Best practices. What have those of you who have done this found to be the best method of clearly identifying and claiming these deductions? Any ideas?

[Bees Knees]

It is done all the time as "Unreimbursed Partnership Expenses." (TheTaxBook, page 20-7) If the partnership agreement specifically states that the partner is required to pay the expense, or paying the expense is a routine partnership practice tantamount to an agreement, then you enter the expense on column h of line 28 of Part II of Schedule E and enter "UPE" as the name of the line item. You use the next line following the line you reported the K-1 amounts. The expense is thus deducted against partnership income on Schedule E. If the partner is subject to SE tax on partnership income, then the UPE is also allowed to reduce net income subject to self-employment tax. There is an example on page 20-26 of TTB of how to report UPE.

[Openfire]

Thank you! I really appreciate the confirmation. I was really hoping my software had a cheat sheet to make carryover to next year easier to track, but it does not. I appreciate your expertise and quick answer Bees.