MTW wrote:
- quote -

here's a vote with Gene, in that there's no requirement by
IRS the agreement be written aforehand. Should be though,
we'll all agree.

ChEAr$,
Harlan Lunsford, EA n LA
Sun 13 Feb 2005

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Gene E. Utterback, EA wrote:

- quote -

I agree that the expenses can be specifically allocated if
so designated in a WRITTEN allocation agreement prepared
prior to the filing of the partnership return. But, as long
as you are preparing a WRITTEN agreement, why not make a
permanent modification to the partnership agreement (rather
than an annual allocation agreement) ???

MTW

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"Irving Katz" <irvkatz[at]ameritech.net> wrote:

- quote -

If your operating agreement requires you to bear the burden
of those expenses then you deduct them as an additional line
item on Schedule E. Schedule C is not appropriate because
the expenses are not related to a different trade or
business. As a member in an LLC you are NOT an employee so
they don't go on Form 2106 as a miscellaneous itemized
deduction either. You have only three options:

1 - forfeit them - nobody likes this option!
2 - claim them as Unreimbursed Member's Expenses on Schedule E
- ONLY allowable IF the operating agreement requires you
to bear the burden; or
3 - treat them as a contribution to the LLC. The LLC gets
the deduction, you get credit to your capital account for
the amount, and the effect flows back to you in lower pass
through income. NOTE, some will say that doing things
means you have split your expenses with the other members,
but I believe that you can specifically allocate losses
among members.

Gene E. Utterback, EA

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Greetings to all. TIA to anyone with insight on my
particular issue:

I am a partner in an LLC in Ohio. It currently is my only
source of income. In '04, I had profits flow-thru to me. I
will be issuing myself a Schedule K-1 reflecting that.

However, I did most of my work out of my home and my car and
I would like to take deductions for that.

My question is where do those deductions belong? Schedule C
or Misc Itemized Deductions? (My wife and I itemize). If
Schedule C, do I report zero income since I have a K-1? How
do the C and K-1 inter-relate?

Thanks very much.

Irv

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