Partnership Retirement Plan Deduction

Technical topics regarding tax preparation.
#1
MTS  
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I have a client who received a K-1 from their partnership, which showed a $15k loss, and $4k of guaranteed payments. The taxpayers basis in the partnership was $1,500, so the loss is limited. The net income reported for the partnership is $2.5K ($4k less $1.5k allowable loss). On the K1, there are deductions in box 13 of $4k for medical insurance and $2.5k for Pensions/IRA (actually a 401k plan). The medical insurance is being included on the 1040 as a self-employed insurance deduction. For the retirement plan contribution, can that be deducted as a self employed retirement plan contribution or are there limits what can be contributed when a partnership is showing a loss?
 

#2
MWPXYZ  
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Was the $15K loss in box 1 or was it from a real estate activity or other rental activity or a capital loss.

401(K) contribution is based on earned income only.
 

#3
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sounds like the guaranteed payment is equal to the medical insurance premiums?
 

#4
JR1  
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And when you say they have no basis, are you considering liabilities?
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#5
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The $15 loss was in Box 1, and there are no liabilities to factor into their basis. The guaranteed payment was the same as the medical insurance premiums, which seemed strange. Not something I've seen before.
 

#6
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So on the taxpayers return, I think I'm left with a SE Health Insurance deduction of $3,717 ($4,000 guaranteed payments less $283 for the deductible part of the self employment tax), net partnership income of $2,500 ($4,000 guaranteed payments less loss which is limited by the partner's $1,500 basis), and no self-employed retirement plan contribution deduction for $2,500 based on the fact the partnership had an ordinary loss (even though the taxpayer shows net partnership income due to their basis limitations). Missing anything there?
 

#7
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In that first sentence, I meant to say $4k of health insurance payments, not guaranteed payments.
 


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