K1 income without distributions, supplemental expenses

[fischerc57]

We are assigned income from a partnership without any distributions, fair enough, but we also are incurring expenses that are associated with the partnership.  These expenses include tax preparation performed by the trustee as well as some legal expenses.  Can these expenses be declared and deducted?

[Anonymous_ · Accepted solution]

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@fischerc57 wrote:

Can these expenses be declared and deducted?

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Most likely they cannot be deducted unless they were unreimbursed partnership expenses.

See https://www.irs.gov/instructions/i1040se#en_US_2022_publink24332td0e1927

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.