Partnership Vehicle Expenses

[jerrygerardo4000]

I have a partnership and I am filling out my first 1065.  

I use a vehicle that is in my name and not my personal name for business reasons.  Do I need to fill out the expenses when filing the 1065 or can I just deal with that on my personal tax return?  If so, would I be filling out a schedule C for those expenses?  If that is the case, I would be filling out a Schedule K and Schedule C for the same business.  

[PatriciaV]

Important questions for your situation:

• Are you an active participant in this partnership?
• Does the partnership reimburse you for your vehicle expenses? If so, the expenses belong on Form 1065 and not your personal return.
• Does the partnership agreement state that you are required to pay for this vehicle yourself?

According to the IRS (instructions for Form 1040, Schedule E) :

Unreimbursed Partnership Expenses

You can deduct unreimbursed ordinary and necessary partnership expenses you paid on behalf of the partnership on Schedule E if you were required to pay these expenses under the partnership agreement. You can only deduct unreimbursed expenses on Schedule E that are trade or business expenses under section 162. Don't report unreimbursed partnership expenses separately if the expenses are from a passive activity and you are required to file Form 8582; otherwise, do the following.

• Enter unreimbursed partnership expenses from nonpassive activities on a separate line in column (i) of line 28. Do not combine these expenses with, or net them against, any other amounts from the partnership.
• If the expenses are from a passive activity and you are not required to file Form 8582, enter the expenses related to a passive activity on a separate line in column (g) of line 28. Do not combine these expenses with, or net them against, any other amounts from the partnership.
• Enter “UPE” in column (a) of the same line.

Note that you will include the information from the partnership Form 1065 Schedule K-1 on your personal Form 1040 Schedule E, not Schedule C.

[nailgafarov]

We have same situation, our vehicle was registered under partnership. And each partner drive ~10k miles but we not recognize that will be undeductible by miles in mmllc. Can we deduct this miles in ours smllc tax returns? Because we pay cash at gas stations it will be really hard to calculate actual expenses.

We bought and sell this vehicle in 2021 I see we can include purchase in assets but where I can file selling? Turbo tax Business 2021.  

[ZoltanB45]

There should be a tab that asks whether you stopped using the vehicle in 2021. If you select that, it will generate questions such as the sale price and date it was disposed of. 

[nailgafarov]

I see that option in web version for smllc and personal return, but I dont have that option in desktop turbotax Business 2021.

[ZoltanB45]

These steps may work better..

1. Under, Your Total Business income, click the Start/Update box next to Business property/asset disposals. It may be under Items You Can Skip.  
2. select Yes to next to the question about asset disposl
3. On the screen Select Disposed Asset, click the Select box next to the asset you've disposed of.
4. Answer the remaining questions regarding date of disposal and sale price of the vehicle

[nailgafarov]

Thank you! What you can say about mileage? Can I deduct miles in my smllc return?

[ZoltanB45]

You can deduct miles drive along with home office expenses on your personal tax return as it relates to the partnership. You do not need an SMLLC to do so. You would record it as an Unreimbursed Partnership Expense on the 1040. You would fine it on the schedule E (K-1 section).

[AmeliesUncle]

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@nailgafarov wrote: our vehicle was registered under partnership.

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If the vehicle belongs to the Partnership, no, you can't use the Standard Mileage Rate as a deduction on your personal tax return. 

[WilHen02]

I get the theory explained here. Execution not so much. In TTH&B 2021 I am not able to input on the specified lines on either schedule E pg 2, nor find another line.

[PatriciaV]

@WilHen02

If you qualify to report Unreimbursed Partnership Expenses (see beginning of this thread), you will enter this during the interview for the related Schedule K-1.

1. Go to Income >> Schedule K-1 >> Start/Update
2. Choose Partnership/LLC and Add or Edit your K-1.
3. Follow the prompts to a page titled "Describe the Partnership."
4. Check the box for "I am required to pay supplemental business expenses on behalf of this partnership/LLC for which I am not reimbursed."
5. Answer "yes" to the question about "...your own pocket?".
6. Answer "yes" to the question about vehicle expenses.
7. Continue to enter your vehicle information.
8. If you do not own the vehicle (ex: the Partnership holds the title), you will be able to report expenses but you won't be able to use the standard mileage method.
9. Continue to the end to see your total vehicle deduction.
10. You will be given the opportunity to report other expenses on subsequent pages.
11. Be sure to report any reimbursements you received from the partnership.
12. Continue back to the K-1 Summary page to save your entries.

Your entries will appear on the Supplemental Business Expenses Worksheet (Suppl Exp - P) under the related K-1 Partner for this Partnership.

[allrryan]

I am having a similar issue.  We do own the vehicle and am trying to input the mileage, but when I get to the screen about Describe the Partnership.  I don't show the option you mention - it just shows the below.  Is there another screen?

Describe the Partnership

Check any that apply:

This is a publicly traded partnership.   This is a foreign partnership.   This partnership ended in 2022.   Disposed of a portion of my interest in partnership during 2022.   I received an amended K-1 for this partnership.   None of these apply.

Thanks

[allrryan]

Nevermind - It is on another Describe the Partnership screen later on.  Just in case anyone else gets to the first one and doesn't see it.

[WilHen02]

If the vehicle is owned by the Partnership it goes on the partnership return.

If it is owned by the individuals it gets reported on the individuals 1040 and is entered with the K-1.

Partnership needs to address how vehicles are handled by the partnership.

Where I ended up.