Self Employment Tax Calc for Partners (K-1s)

[cheersmate]

401(k) Plan sponsored by LLC taxed as partnership.

When computing (1) the 1/2 Self Employment Tax offset and (2) the resulting "plan compensation" for allocation purposes, are Box 14 code A  Self Employment Earnings first reduced by the Box 12 Section 179 Deductions before computing the Self Employment Tax? I do not see this reduction (adjustment to Box 14 SEI) on Schedule SE (Form 1040) in the computation of the self employment tax.

Thank you

[mphs77]

I believe the Section 179 deduction only applies to General Partners.

[cheersmate]

mphs77 thank you for your reply. 

4 minutes ago, mphs77 said:

I believe the Section 179 deduction only applies to General Partners.

Just to confirm I understand your reply, the Self Employment Tax calc requires K-1 Box 14 SEI be reduced by K-1 Box 12 for General Partners? Likewise, the net Plan Compensation would also be Box 14 reduced by Box 12 reduced by the 1/2 SET offset? Thank you again.

[Mike Preston]

Follow the SE.

[Larry Starr]

12 hours ago, cheersmate said:

mphs77 thank you for your reply. 

Just to confirm I understand your reply, the Self Employment Tax calc requires K-1 Box 14 SEI be reduced by K-1 Box 12 for General Partners? Likewise, the net Plan Compensation would also be Box 14 reduced by Box 12 reduced by the 1/2 SET offset? Thank you again.

Send your real email address to me at larrystarr@qpc-inc.com and I'll send you my ASPPA outline that covered all these issues.

[Nate X]

General partners Box 14A income is reduced by Section179 expense deduction claimed, unreimbursed partnership expenses claimed, and depletion claimed on oil and gas properties.  It is my understanding that Section 179 expense has a deduction limit, so it's not always safe to lift the amount off of Box 12.