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Form 1065 Admin Expenses

Technical topics regarding tax preparation.
#1
DEN56  
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I have a LLC partnership-A that is invested in a LLC real estate partnership-B with income on line 2 of the K-1 received from partnership-B. The only activity in partnership-A is the investment in partnership-B. Partnership-A incurred expenses for admin such as travel, professional fees, management etc. I am getting different answers in my research where these expenses should be deducted on partnership-A. Line 1, line 11, line 13, and if line 11 or 13 what code? Thanks!
 

#2
Nilodop  
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The general idea (but there are specifics) is for the 1065, through the K-1s, to inform the partners about their distributive shares of the partnership items that need to be reported separately to them so they will know where to put them on their 1040s, in turn because they might affect (change) the tax calculations for the partners.

I'd say take a look at section 702, and then reg. 1.702-1. They won't tell you in so many words what line to put the expenses on (and neither will I) nor what code to use (and neither will I), but they will enable you to figure out whether they fit into a class or item of partnership income, gain, loss, deduction, or credit described in subparagraphs (1) through (9) of reg. 1.702(a). If they do, then they needed to be reported separately to the partners, which brings us to your questions. We can't answer you, because we don't know enough about the nature of the expenses or, more to the point, the nature of the business and/or investment operations of partnership B.

Then you'd scan, and in some parts peruse, pages 30 near the bottom through somewhere on page 49 of the 1065 Instructions, even though hardly any of it is likely to apply but you never know, because those pages are all under a heading called
Specific Instructions
(Schedules K and K-1, Part
III, Except as Noted)
.

Sometimes we just have to read a lot of stuff, but it helps for the next time and the times thereafter.

Which reminds me - your OP asks about lines for deductions on partnership A, and my above response leapt to the interpretation that you must mean on Schedule K of the 1065 of partnership A. I got there by deduction from the clues you provided by your listing the line numbers.
Last edited by Nilodop on 16-Mar-2019 8:03pm, edited 1 time in total.
 

#3
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Seems to me, all you’re managing here is a partnership interest, an investment. These used to be 2% deductions, now they’re gone because of the new law.
 

#4
Nilodop  
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See, in 2 lines Jeff said what I rambled on about in maybe 20 or more.
 

#5
Nilodop  
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Would it matter if, say, the so-called admin expenses were something along these lines:
Travel - either to, or on behalf of, partnership B in order to be directly involved in B's operations.
Management - direct involvement in B's operations.
Professional fees - fees directly related to B's operations.
As opposed to:
Travel - to attend partners' meeting.
Management - to "manage" the investment in B.
Professional fees - legal and accounting for the investment.
 

#6
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Would it matter if, say, the so-called admin expenses were something along these lines:


Maybe. What I was thinking when I wrote Post #3 was RR 2008-39. The recent Bagel case (Lender Management) might have some relevance.
 

#7
Nilodop  
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Absent a link, I searched Bagel.
At trial petitioner asserted that because of the alleged abusive treatment by her employer, on one occasion she fell and twisted her ankle and on another occasion she cut her thumb while slicing a bagel.

Appellant Michael Calabrese operated “Don’s What a Bagel, Inc.,” ...

VSA operated a business called "Bagel Nosh."

Whether petitioners are entitled to a depreciation deduction of $7,551 in connection with the Bagel King for 1983.

I rapidly concluded I had. the wrong search term. :roll:

This must be the missing link. https://www.ustaxcourt.gov/ustcinop/opi ... x?ID=11513.
 

#8
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on one occasion she fell and twisted her ankle

I would think you would twist your ankle and then fall…
 

#9
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At some point during that game, Dennis Keith Rodman (Mr. Rodman), who was playing for the Chicago Bulls, landed on a group of photographers, including petitioner, and twisted his ankle. Mr. Rodman then kicked petitioner. (We shall refer to the foregoing incident involving Mr. Rodman and petitioner as the incident.)

This case was interesting, though, because – I think - the guy was already on the ground when his ankle was twisted. I assume it was the petitioner’s ankle that was twisted, but the sentence isn’t totally clear. It’s also not clear if the petitioner was sitting when he got kicked. All of this isn’t totally clear from what the judge wrote, but if you’ve seen the video, you know the petitioner was, in fact, sitting down when all of this transpired.

And if you want my opinion, the judge totally botched this case.
 

#10
Nilodop  
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I never knew Rodman's middle name before reading the case.

Petitioner /cameraman was indeed seated when Keith kicked his groin; he appeared to be upset that petitioner was still taping him.

In which direction did the judge botch the case totally?
 


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