Business & farm

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.