Where do you enter tax-exempt income on a partnership return?

Forum|Forum|4 years ago
January 22, 2022
2 replies
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Lacerte Tax

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Best answer by George4Tacks

I am putting it under Other Schedule K Items - under Other income or (loss) in 22.1.

I believe that businesses need to treat this as a reduction in the cost of the purchases made with these cards. I believe that for a business, this is either an "Other Income" or "Reduction in Purchases". It is not a tax free, tax exempt, or in any way free of being taxed.

https://www.investopedia.com/ask/answers/110614/are-credit-card-rewards-considered-taxable-income-irs.asp

joshuabarksatlcs

Level 9

Screen 27 (for 2020), Sch M-1/M-3.

Book/Tax difference; Tax exempt income; Non-deductible expenses... etc.

I come here for kudos and IRonMaN's jokes.

joshuabarksatlcs

Level 9

Just opened 2021 to check. Screen 27 also.

I come here for kudos and IRonMaN's jokes.

D

DENPAuthor

Level 3

I'm sorry, I meant to say non-taxable income, not tax-exempt income.

George4Tacks

Level 15

Please clarify the difference between the two.

What is the source of this non-taxable income? Is it a non taxable dividend? PPP loan forgiven? We need to know the flavor before we can help with anything other than the excellent answers provided by @joshuabarksatlcs

Answers are easy. Questions are hard!

D

DENPAuthor

Level 3

As I understand it, tax-exempt income is usually income that is derived from various investments that IRS or the government has some law that specifically exempts that income from taxation, such as income from municipal bonds. What I am looking at is income from rebates that credit cards issue based upon a certain percentage of your purchases, which I remember reading is non-taxable per the IRS.

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