topic Unreimbursed Partnership Expenses (UPE) not deducted for General partner with Guarantteed Payments for services income in Business & farm

Unreimbursed Partnership Expenses (UPE) not deducted for General partner with Guarantteed Payments for services income

xxzjane — Sun, 22 Mar 2026 06:00:57 GMT

I own a single member llc as a disregarded entity. This LLC is the general partner of the a partnership. It received K1 with Guaranteed payments for services (4a) of $24000. When I input the K1, I also reported Unreimbursed Partnership Expenses (UPE) of $13000, but UPE of $13000 was not deducted from the income of $24000. The $24000 is characterized as nonpassive income in schedule E part II. I did check the partnership agreement requires GP pay expenses out of the pocket. I think this is a bug on TT? Can you take a look and help fix it?

I am using turbotax online premium.

I have shared my file with agent and token number is 1343488. Thanks!

Re: Unreimbursed Partnership Expenses (UPE) not deducted for General partner with Guarantteed Pay...

PatriciaV — Sun, 22 Mar 2026 22:05:35 GMT

Thank you for the token. We are looking into the issue and will respond as soon as we have information to share.

Re: Unreimbursed Partnership Expenses (UPE) not deducted for General partner with Guarantteed Pay...

PatriciaV — Mon, 23 Mar 2026 14:43:36 GMT

After reviewing the diagnostic copy of your return, we discovered that the Schedule K-1 for this partnership did not reflect material participation. This is required for the UPE to be correctly reported on Schedule pg 2 Line 28 column (i) on a separate row for non-passive activity. Without material participation, UPE is reported on Form 8582 as a passive loss.

To correct this in TurboTax Online, log into TurboTax and open your return.

Navigate to the Schedule K-1 topic and edit the related partnership K-1.
On the page "Choose Type of Activity," check the box for "Business - Box 1." Even though your partnership did not report box 1 income on this K-1, checking this box will allow you to answer the next question.
On the page "Did you participate?" answer Yes.
Continue and enter nothing for Box 1.
Review your entries for Boxes 4a and 14(A).
Continue through the interview to review your answers and entries for UPE.
Continue until you reach the K-1 summary page.
Go to Tax Tools in the left column and choose Print Center.
Proceed to view your return and check Schedule E pg2 to be sure the K-1 information appears on Line 28 in two separate lines as expected.