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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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