The cost to prepare the final tax return for a parternship was paid personally by the only "active" partner. The expense was not paid by funds from the partnership and was not deducted on the final partnership return.
Where can I deduct the cost? Schedule A unreimbursed employee expenses (line 21) or tax prep fees (line 22)?
Schedule A subject to 2% of AGI, UNLESS partnership agreement allowed this type of expenses, then on Sch E and reduce SE tax.
Helen, EA in PA
answered 14 Mar '10, 19:50
Helen EA in PA
The question is "WHY did he pay it personally?". Was there no money in the partnership?
You say he was the ONLY ACTIVE partner - what exactly does that mean? Was he the only GENERAL partner?
Helen is quite correct that if the partnership agreement calls for him to pay such things personally then he is entitled to take it as an additional Schedule E, Page 2 Item as Unreimbursed Partnership Expenses.
However, even if you don't have the partnership agreement, IF there was no money left in the partnership and he was the only General Partner - I'd be very, VERY tempted to take it as UPE anyway. NOTE that this is an aggressive position that the IRS could easily challenge so be very careful.
answered 15 Mar '10, 18:25
The other option would be to accrue the charge to the 2009 return, and allocate it to the partner that paid it.
answered 25 Mar '10, 19:19
blehrhof EA ...