ExpertHard1 markMultiple Choice
CPA · Question 34 · Area V: Entity Taxation
Which of the following items is a 'separately stated item' on a Partnership Schedule K-1?
Which of the following items is a 'separately stated item' on a Partnership Schedule K-1?
Answer options:
A.
Employee salaries.
B.
Rent expense.
C.
Guaranteed payments (to the partnership).
D.
Section 179 expense deduction.
How to approach this question
Separately Stated Items = Items that might be treated differently by different partners (Charity, Capital Gains, §179, Investment Interest). Ordinary items = Operating expenses.
Full Answer
D.Section 179 expense deduction.✓ Correct
D
Section 179 expense is a separately stated item because the dollar limitation applies at both the partnership and the partner level. The partnership cannot deduct it in calculating ordinary business income.
Common mistakes
Thinking Guaranteed Payments are separately stated (they are a deduction for the partnership, though reported as income to the partner).
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