I’m in a general partnership that received a 1099-int. If the 1099-int info was included on form 1065, do I still need to report the 1099-int on my personal return?

[ToddL99]

Did the 1099-INT report the interest income under your SSN or the EIN of the partnership?

If the 1099-INT reported interest income for the general partnership (under its EIN), then do not report it again on your tax return - your share of the interest income will get reported on your return by way of the K-1 you got from the partnership.

[ladeuxieme]

@ToddL99 Thank you!

[cindi]

There is no 1099 form in TurboTax Business.  How does this get entered?

Shouldn't incidental interest income associated with a passive activity (rental real estate) also be passive income and not subject to SE tax?

[PatriciaV]

@cindi - Please clarify the source of the incidental interest income from rental real estate. The IRS considers all interest income (other than tax-exempt) to be ordinary income, which is reported on the partner's return.

[cindi]

Thanks. I'm getting conflicting info on this.  Some say that if it's passively earned then it's also passive.  I would find it odd that when rent is passively earned it is not subject to SE taxes, but if interest is passively earned and entered as "other income" then it is subject to SE taxes.

In my case the source of the income is deferred Covid rent which caused a portion of the rent to be considered interest per Section 467.

[PatriciaV]

Yes, according to Section 467(e)(3): Section 467 interest is treated as interest for all purposes of the Internal Revenue Code. But interest is specifically excluded from earned income (IRS Pub 596 (EITC) Income That Is Not Earned Income), ie: interest is passive income.

The IRS instructions for Form 1065 Partnership Income specifically state that interest on notes or accounts receivable is NOT included as net earnings from self-employment for General Partners. 

Bottom line: Interest income is reported to the partners on Schedule K-1 Box 6, and you will need to report this income on your personal tax return. But that amount should not be included on Schedule SE in the calculation of self-employment tax.

[cindi]

Perfect.  Thank you!