K-1 Income and contribution calculations

[ldr]

Hi to All,

In calculating the potential maximum contribution for the partners in a LLC, which number on a K-1 for Form 1065 is used as the equivalent of a regular employee's W-2 wages for purposes of calculating a contribution?

We are working on a plan where a prior administrator in past years has used Item 14A, "Self-employment earnings (loss)" as the magic number for the year upon which to make calculations.  We'd like to know if this is the correct approach.  Maybe I should clarify that Item 14 does not automatically come with the letter A attached.  Whoever prepared the form has put that in there, which according to the list of codes, means that the number is ""Net earnings (loss) from self-employment".

Thanks as always for your comments.

 

[BG5150]

I've often seen A used in conjunction with C, non-farm income.

 

[ldr]

Hi BG5150, Thanks for the reply.  Used in conjunction exactly how?  This particular K-1 I am looking at has $99,948 as the 14A income and $1,028,249 as the 14C, "Gross non-farm income".  Do you add them together or what exactly?

[BG5150]

I just use A.  

[Larry Starr]

3 hours ago, ldr said:

Hi to All,

In calculating the potential maximum contribution for the partners in a LLC, which number on a K-1 for Form 1065 is used as the equivalent of a regular employee's W-2 wages for purposes of calculating a contribution?

We are working on a plan where a prior administrator in past years has used Item 14A, "Self-employment earnings (loss)" as the magic number for the year upon which to make calculations.  We'd like to know if this is the correct approach.  Maybe I should clarify that Item 14 does not automatically come with the letter A attached.  Whoever prepared the form has put that in there, which according to the list of codes, means that the number is ""Net earnings (loss) from self-employment".

Thanks as always for your comments.

 

My outline on self-employment income determination has circled the globe at least 10 times! ?

If you send me an  EMAIL to larrystarr@qpc-inc.com I will be happy to send you the outline which will answer ALL your questions. There are a number of additional steps that must be considered (for example, unreimbursed partnership expenses, Sec. 179 deductions, and certain oil and gas partnership issues) so it is not as simple as just pulling the numbers off the K-1.

[Bill Presson]

15 hours ago, Larry Starr said:

My outline on self-employment income determination has circled the globe at least 10 times! ?

If you send me an  EMAIL to larrystarr@qpc-inc.com I will be happy to send you the outline which will answer ALL your questions. There are a number of additional steps that must be considered (for example, unreimbursed partnership expenses, Sec. 179 deductions, and certain oil and gas partnership issues) so it is not as simple as just pulling the numbers off the K-1.

I endorse getting this. It is invaluable in the literal meaning of that word.

 

WCP

[Larry Starr]

3 hours ago, Bill Presson said:

I endorse getting this. It is invaluable in the literal meaning of that word.

 

WCP

Blush! ?

[ldr]

@Larry Starr, once again, Larry to the rescue!  You will have the email from me within 5 minutes and thank you very much!