Partners' SE Tax

[Snaggletooth]

Fictitious numbers follow:

A partner has a $100,000 loss of ordinary income (loss) on his K-1. Partner has only $75,000 in basis to accommodate the loss, and can only report ($75,000). However he also has $130,000 in guaranteed payments (which do not affect basis).

Self employment tax per the K-1 reads Self-employment income is $30,000. However, since he can only report a loss of $75,000, does this mean his SE income is really $55,000?

[TaxGuyBill]

For what purpose?

[Maribeth]

The partnership does not know your partner's outside basis, so the K-1 is reflecting what should happen if there are no basis problems. So, if you have a $75,000 loss and $130,000 of guaranteed payments, then your SE income is $55,000 for the year.

[Snaggletooth]

Thank you Maribeth. TGB the purpose would be to accurately report self-employment income on his 1040. Thanks for the discussion.