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Form 1065 (K-1) Partnership Employer contribution to 401K

I used Turbo Tax business to complete partnership taxes and then transferred the k-1 manually into Turbo Tax premier for pass-through income.  The box 13R employer contribution to retirement (401K) does not appear to reduce taxable income.  I may be mis-reading the tax law.  Is it not the case that employER contributions are pre-tax and so would reduce the partnership income?

2 Replies

Form 1065 (K-1) Partnership Employer contribution to 401K

no. it is not a partnership expense for tax purposes. however, it is usually treated as a book expense.  

example:

net income before retirement plan contributions 300 schedule K line 1

self-employment income schedule K line 14a 300

retirement plan contribution line 13d code R 20

analysis of net income 280

M-1 line 1 net income per books 280 and line  9  and M-2 line 3 (assuming retirement plan contributions are charged against book income and not charged to the partnership's capital accounts directly

 

 

 

 

 

Form 1065 (K-1) Partnership Employer contribution to 401K

Not sure if this is clear, but a partnership's contribution to a 401k is considered a guaranteed payment to the respective partner; both the partner's and partnership's contribution.

These amounts are then subtracted on the partner's individual tax return as a 401k contribution.

*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
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