Is Mileage expense/deduction claimed on 1065 or 1040?

Question

Hello, I procrastinated and now I beg the community for help.

My wife and I formed a partnership LLC this year and bought our first property.  I have filed the 1065 and did not include mileage expenses in the 1065 since the business did not reimburse my wife and I for all the travel we did to work on the unit.  My assumptions were that on our 1040 somehow I would show that our home is the primary place of business and every trip we made to the unit counted for mileage expense. Then somewhere I would input the total mileage driven and multiply by 0.545 and bam here is a big deduction on our personal return.  I just can't figure out how to actually do this.  I'm also unsure if deducting mileage on personal return for business travel expenses was eliminated by the tax reform?

Can someone offer some guidance?  Hopefully the answer is not to amend the 1065.

Thanks for your time,

Mike

Michael Plaks · Answer

@Michael Coe

It's claimed on 1040 as UPE - Unreimbursed Partnership Expenses. Page 2 of Sch E.

Michael Plaks · Answer

It's only for W2, and no longer available at all

Ashish Acharya · Answer

Mike,

As long as the expenses are the type the partner is expected to pay without reimbursement under the partnership agreement or firm policy (written or unwritten), the partner can deduct the expenses on Schedule E . Per the Schedule E instructions, such expenses should be reported on line 28, column has a separate line item amount along with the partnership name and a description of the amount. The notation “UPE” should be entered in column (a) of the line item along with the name of the partnership.

A partner cannot deduct expenses if the partnership would have honored the partner's request for reimbursement. When allowable, a partner's unreimbursed business expenses should also be included as expenses on his or her Schedule SE, reducing the partner's net self-employment income.

Michael Coe · Answer

I guess my first question would be since my AGI is over 100K I must file "form 8582 passive activity loss"?  When filling out the worksheets for form 8582 would I input my K-1 loss from the 1065 (-$189) and the UPE for mileage here or does the UPE for mileage not go anywhere on form 8582 and is only located in part 2 for schedule E?

Thanks,

Mike

Michael Coe · Answer

Thank you Michael.  I was doing some digging into that last evening and I found a Tax Blog that stated exactly what you said with a caveat due to the new tax reform.  The partnership agreement must say or be amended to say something to the effect that:

"Careful planning is required to take advantage of this exception, including drafting (or amending) the applicable partnership or operating agreement with some specificity to provided that the partner or member is required to non-reimbursed automobile, telecom, client entertainment, professional association or other items.  And, of course, adequate records must be kept substantiating the expenses consistent with the documentation requirements of the tax code."

I think I will be posting a second question soon about form 8582 passive activity loss but I need to work through it first.

Thank you all for your responses thus far,

Mike

Todd Rasmussen · Answer

Well... That tells you how far through mine I am. Thanks for the heads up.

Todd Rasmussen · Answer

Form 2106 is where we do, but we have w-2 jobs we deduct travel for. And it's five days away, you're still ahead of 40% of us!

Is Mileage expense/deduction claimed on 1065 or 1040?

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