Question

Mason is a general partner in a partnership; his share of ordinary income was reported in box 14 of Schedule K-1 (Form 1065). Which of the following statements is TRUE?

Answer 1

True — as a general partner Mason’s distributive share of ordinary business income (reported on the K‑1 as self‑employment earnings) is generally subject to self‑employment tax. He should report it on Schedule SE (and on Form 1040 as part of his income) and may deduct one‑half of the self‑employment tax as an adjustment to income. (By contrast, limited partners generally are not subject to SE tax on their distributive share, except for guaranteed payments or other amounts for services.)