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Overriding Self Employment Taxes for Investment General Partnership

How do I override self employment taxes for general partnership that only has investment activities?  

 

Partnership receives K1's with ordinary income (box 1) which triggers self employment worksheet on form 1065.

 

I have tried deleting self employment worksheet but it pops up again.

 

Cannot label partners as limited partners to avoid self employment worksheet, since they are general partners (and each time I go through partners questions, it resets to general partner status).

 

Tried overriding numbers in self employment worksheet, but self employment numbers still show on K1's for partners.

 

see here from page 41 of 1065 instructions:

"If the partnership is engaged solely in the operation of a group investment program, earnings from the operation generally aren't self-employment earnings for either general or limited partners"

 

I tried the workaround from @PatriciaV  in the below link  and it worked, but still have the problem laid out about Sch K Line 14c in the same link:

https://ttlc.intuit.com/community/taxes/discussion/overriding-self-employment-taxes-for-investment-g...

 

 

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1 Reply
PatriciaV
Employee Tax Expert

Overriding Self Employment Taxes for Investment General Partnership

Are there guaranteed payments shown on Form 1065 pg1-4 Line 10? If not, review Form 1065 p5-6 Schedule K Income (loss) section to identify the source of the income on Schedule K-1 Line 14c. Also check income flowing from Schedules K-1.

Once you identify each source, you can set up a special allocation for that income on Sch K-1 Wks. See this post for step-by-step instructions.

For more specific help with Special Allocations, right-click any yellow box under the SA column of Form 1065 p5-6 and choose "About Sch K-1, Spl Alloc." This On-Demand Tax Guidance includes instructions for nearly every line affected by Special Allocations.

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