K-1 Income

[Guest shm3803]

Is it acceptable to use Line 4 f of schedule K-1 for calculating a partner's comp? Line 4 is 132,400.00 Line 14 C is $486,159.00. Accountant is saying that the only earned income was the Guaranteed payments listed in Line 4 and that the rest of the income reported in Line 14 C was from royalites.

[Lou S.]

What does the document say? My understanding has always been you use the self employment income on line 14 for partners as your starting point. Is there some reason the accountant doesn't think royalties should be included?

[Guest shm3803]

What does the document say? My understanding has always been you use the self employment income on line 14 for partners as your starting point. Is there some reason the accountant doesn't think royalties should be included?

The definintion of comp is Earned Income, which is defined as comp paid for services rendered. I think the accoutant was considering the royalties passive income and not eligible for the plan.

[austin3515]

Box 14A (earnings from self employment), less any 179 is the starting point.

Box 14A is generally guaranteed payments plus ordinary income.

[Guest shm3803]

So I should use line 14 even if the accountant says it includes royalty payments? Thanks!

[rcline46]

What does the accountant take for the Schedule SE??

[Guest shm3803]

The accountant is not getting back to me regarding the schedule SE but I don't think there will be one b/c he did a 14C instead of a 14A.

[K2retire]

If there is no Schedule SE, there is probably no earned income for plan purposes either.

[Guest shm3803]

If there is no Schedule SE, there is probably no earned income for plan purposes either.

Thanks!!