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Accountant-Man
Level 13
September 22, 2023
Solved

Is 1065 K-1, line 1, always subject to SE tax, even for limited partners?

  • September 22, 2023
  • 2 replies
  • 22 views

Why does Ordinary income, line 1 of 1065 K-1, get taxed as S/E income even when it's a Limited Partner?

Do not check Material Participation.

Even zero as SE income still creates SE tax.

How to get it right?

This topic has been closed for replies.
Best answer by Accountant-Man

Sorry, I had an identical entry on the SE earnings w/s. My mistake, it is ok.

2 replies

sjrcpa
Level 15
September 22, 2023

Not always. Yes if they participate (work) in the business. No if they are a silent investor.

Are you preparing the 1065? Or dealing with a K-1 received?

The more I know the more I don’t know.
Accountant-Man
Accountant-ManAuthorAnswer
Level 13
September 24, 2023

Sorry, I had an identical entry on the SE earnings w/s. My mistake, it is ok.

** I'm still a champion... of the world! Even without The Lounge.
Level 15
September 24, 2023

@Accountant-Man wrote:

 

Even zero as SE income still creates SE tax.


 

Are you referring to line 14 of the K-1?  That is what triggers SE tax.