LLC Partnership Question

[Absolut]

If two brothers have a partnership for a contracting company, and they pay all the expenses for thier trucks through the partnership, can they take their mileage on the personal returns?

The trucks are owned by each personally by each partner.

Also if one of the partners wants to get Health Insurance and the other one doesn't can the other partner maybe take his share that would have been for insurance and put it in a SEP or IRA?

Distributions for the partnership, each partner pays himself for the hours worked for the week; example 40 hrs @ $20 = $800.00. Would this be considered a guaranteed payment? What I did was put it under guaranteed service, and also recorded the total on page 1 line 10 of the 1065, but when it prints the K-1's it will allocate what each partner took, because some weeks they didn't work the same hours.

[Gretel]

If two brothers have a partnership for a contracting company, and they pay all the expenses for thier trucks through the partnership, can they take their mileage on the personal returns?

The trucks are owned by each personally by each partner.

Also if one of the partners wants to get Health Insurance and the other one doesn't can the other partner maybe take his share that would have been for insurance and put it in a SEP or IRA?

Distributions for the partnership, each partner pays himself for the hours worked for the week; example 40 hrs @ $20 = $800.00. Would this be considered a guaranteed payment? What I did was put it under guaranteed service, and also recorded the total on page 1 line 10 of the 1065, but when it prints the K-1's it will allocate what each partner took, because some weeks they didn't work the same hours.

Part of the answers.

I have a partnership just like sthat where gas is paid through the partnership but everything else for the trucks by the partners. They have a clause in the partnership agreement that they are required to pay auto expenses by themselves and no reimbursement is available along with some other expenses. I have alway then taken SMR on their 1040's and deducted whatever was paid for already.

Moneys paid for services are guaranteed payments and the total for the year (whatever the partnership decides this will be) needs to be recorded in the minutes.

[JoshinNC]

I disagree on the guaranteed payments

GP's are those payments that are made on a specified schedule and are independent of the profits of the business. This is why I always advise my LLC clients to take uneven distributions on different days of the month so that there is no pattern to the payments and that they never take out more than the profits of the business for the year plus their carryover basis. Most of my LLC clients pay little, if any, SE tax (except maybe for SE H/I).

[Absolut]

GP's are those payments that are made on a specified schedule and are independent of the profits of the business. This is why I always advise my LLC clients to take uneven distributions on different days of the month so that there is no pattern to the payments and that they never take out more than the profits of the business for the year plus their carryover basis. Most of my LLC clients pay little, if any, SE tax (except maybe for SE H/I).

But wouldn't the distributions be taxable? If not where are you placing them on the 1065?

[Jesse]

They have a clause in the partnership agreement that they are required to pay auto expenses by themselves and no reimbursement is available along with some other expenses. I have alway then taken SMR on their 1040's and deducted whatever was paid for already.

It is important to have this written agreement.