Compensation - K-1 - Real Estate Income

Good afternoon to all,

I have been asked to post the following question, and I do not have any further details concerning the reason for the question.

"Is the definition of plan compensation for a partner (in a partnership) anything other than box 14a on the K-1 if the income comes from real estate income? "

Thank you in advance for any information you can share in this regard.

Is it subject to Self-Employment taxes for services provided or is it passive real estate income not subject to SE taxes?

Lou please bear with me because I am caught in the middle of ferrying requests back and forth.  The way it was just explained to me, the person posing the question is asking if box 14a on the K-1 is the answer to the question of what can be used as compensation for plan purposes, without any regard to whether the income is passive or not?  In other words, if the CPA has prepared the K-1, can the box 14a number be used for plan purposes, period, without worrying any further about the composition of what went into the box 14a number?

I'm not a CPA but my understanding is the number on box 14a of the K-1 is the number that goes on to the Schedule SE for determining SE taxes and as such is "pensionable" earned income. I don't think you need to audit the CPAs work as to how they got there unless that's part of your service agreement.

12 hours ago, Lou S. said:

I don't think you need to audit the CPAs work as to how they got there unless that's part of your service agreement.

100% this.

Thank you both for your responses. 

Sounds like they need a new CPA.  Rental real estate is not considered a trade or business and is not subject to SE Tax.

18 hours ago, Dare Johnson said:

Sounds like they need a new CPA.  Rental real estate is not considered a trade or business and is not subject to SE Tax.

We have a client who has real estate income and considers some of it self-employment income since they are managing the properties. I think that is reasonable and appropriate. It depends.