SEP contributions for a partnership

[Auto]

Does anyone know if a partnership contributes to the partners SEP, is it considered a distribution to the partner? Is it considered an expense to the partnership? I believe it is not an expense to the partnership and that it is only listed on the partner's K-1. Also, I believe Line 18 on the 1065 is only used when the Partnership contributes to a regular W-2 employee and not for a partner. Am I correct?

[Halliganjc]

Partnerships SEp Contributions to Partners SEP

I believe this would be handled much like Partners health Insurance, There would be a Sch M-1 entry expense for book not tax, and reported on Sch K line 18(c) Non Deductible items then allociated to the partners Sch K-1 line 18 by dollar amounts.

[Bees Knees]

TTB Small Business edition, page SB6-1, Where To Deduct Qualified Pension Plan and IRA Contributions:

Form 1065 Partnerships, Employer contributions and elective deferrals made on behalf of a partner....

Form 1065, page 3, Schedule K, line 13d, Other deductions, and Schedule K-1,
box 13, Code Q. The partner then enters amount on Form 1040, line 28

[Auto]

partner distribution

So is the contribution considered a distribution on the partnership books or a book expense only i.e. SEP Contribution?

[Bees Knees]

So is the contribution considered a distribution on the partnership books or a book expense only i.e. SEP Contribution?

The way something is handled for bookkeeping purposes and the way it is handled for tax purposes are not always the same. Something reported separately on the K-1 for tax purposes may very well be an expense for book purposes, and vise versa.

In the case of retirement contributions made on behalf of the partners by a partnership, TTB Small Business edition example on page SB4-16 treats it as an expense for book purposes, and on page SB4-21 treats it as a separately stated item on the K-1 for tax purposes.

This is a very basic concept in partnership taxation. I suggest you study the partnership example starting on page SB4-12 before attempting to prepare a Form 1065.

[Auto]

k-1 ordinary income reduced by SEP contrib

Thank you for your reply. I do realize book and tax differ. I understand for tax it is going on the k-1 line 13 code Q. For book, however, is it an expense or is it deducted from the partner's capital accounts as a distribution?
I'm leaning on it being an expense for book. When I put the SEP contribution into ProSeries, I had to reduce the book income by that amount. So now on the k-1, the ordinary income is reduced by the SEP contribution. Is this correct?

[Auto]

forget that

No, I take that back. In reprinting the K-1's they are coming out fine. the ordinary income is exactly as it should be.