Michael T. Hines - Page 4

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          Return of Partnership Income, which showed total income of                  
          $332,973, total deductions of $233,899, and ordinary income of              
          $99,074.  The Schedule K-1, Partner’s Share of Income, Credits,             
          Deductions, etc., attached to Form 1065, reported petitioner’s              
          half share of the $99,074 as $49,537.                                       
               Petitioner reported total partnership income of $16,122 on             
          Schedule E, Supplemental Income and Loss, attached to his Form              
          1040, U.S. Individual Income Tax Return.  Petitioner now concedes           
          that the $49,537 reported on Schedule K-1 should have been                  
          reported on Schedule E, but claims that only $16,122 should be              
          subject to income tax because petitioner incurred unreimbursed              
          partnership expenses totaling $33,415.                                      
               It is well settled that a partner may not directly deduct              
          partnership expenses on his individual tax return.  Cropland                
          Chem. Corp. v. Commissioner, 75 T.C. 288, 295 (1980), affd.                 
          without published opinion 665 F.2d 1050 (7th Cir. 1981);                    
          Wallendal v. Commissioner, 31 T.C. 1249, 1252 (1959).  An                   
          exception applies when there is an agreement among the partners             
          in a partnership agreement, or in a routine partnership practice            
          tantamount to an agreement, which calls for a partner to pay                
          partnership expenses from his own funds.  Cropland Chem. Corp. v.           
          Commissioner, supra at 295; Wallendal v. Commissioner, supra at             
          1252; Klein v. Commissioner, 25 T.C. 1045, 1051-1052 (1956).                
               The partnership claimed total deductions of $233,899 on its            

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