Page 302 - BusinessStructures & Forms

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allowable deduction for any portion of the credit that was passed capital expenditures. However, they should be reported as
through to the partnership from another pass-through entity.) guaranteed payments on the applicable line of Schedule K, line 4b,
1. Work opportunity credit. and in box 4b of Schedule K-1.
2. Credit for increasing research activities. Do not include distributive shares of partnership profits.
3. Disabled access credit. Report the guaranteed payments to the appropriate partners
4. Empowerment zone employment credit, if applicable. using the applicable box 4 of Schedule K-1.
5. Indian employment credit, if applicable. Line 11. Repairs and Maintenance
6. Credit for employer social security and Medicare taxes paid
on certain employee tips. Enter the cost of repairs and maintenance not claimed elsewhere on
7. Orphan drug credit. the return, such as labor and supplies, that are not payments for
improvements to the partnership’s property. Amounts are paid for
8. Credit for small employer pension plan startup costs and improvements if they are for betterments to the property, for
auto-enrollment. restorations of the property (such as the replacements of major
9. Credit for employer-provided childcare facilities and services. components or substantial structural parts), or if they adapt the
10. Low sulfur diesel fuel production credit. property to a new or different use. Improvements must be
capitalized. See Regulations section 1.263(a)-3.
11. Mine rescue team training credit, if applicable.
12. Credit for employer differential wage payments. The partnership can deduct repair and maintenance expenses
13. Credit for small employer health insurance premiums. only to the extent they relate to a trade or business activity. See
Regulations section 1.162-4. The partnership may elect to capitalize
14. Employer credit for paid family and medical leave (Form certain repair and maintenance costs consistent with its books and
8994). records. See Regulations section 1.263(a)-3(n) for information on
15. Employee retention credit for employers affected by qualified how to make the election.
disasters (Form 5884-A).
Line 12. Bad Debts
Note. Wages taken into account in determining the credit for Enter the total debts that became worthless in whole or in part during
qualified sick and family leave on Form 941 cannot be taken into the year, but only to the extent such debts relate to a trade or
account in determining the employer credit for paid family and business activity. Report deductible nonbusiness bad debts as a
medical leave on Form 8994. See the Instructions for Form 8994. short-term capital loss on Form 8949.
If the partnership has any of the credits listed above, figure each Cash method partnerships cannot take a bad debt
current year credit before figuring the deductions for expenses on deduction unless the amount was previously included in
which the credit is based. ! income.
CAUTION
Line 9. Salaries and Wages
Enter the salaries and wages paid or incurred for the tax year, Line 13. Rent
reduced by the amount of the following credit(s). Enter rent paid on business property used in a trade or business
• Work Opportunity Credit (Form 5884). activity. Do not deduct rent for a dwelling unit occupied by any
• Empowerment Zone Employment Credit (Form 8844), if partner for personal use.
applicable. If the partnership rented or leased a vehicle, enter the total
• Indian Employment Credit (Form 8845), if applicable. annual rent or lease expense paid or incurred in the trade or
• Mine Rescue Team Training Credit (Form 8923), if applicable. business activities of the partnership. Also complete Part V of Form
• Credit for Employer Differential Wage Payments (Form 8932). 4562. If the partnership leased a vehicle for a term of 30 days or
• Employee Retention Credit for Employers Affected by Qualified more, the deduction for vehicle lease expense may have to be
Disasters (Form 5884-A). reduced by an amount called the inclusion amount. The partnership
Do not reduce the amount of the allowable deduction for any may have an inclusion amount if:
portion of the credit that was passed through to the partnership from
another pass-through entity. See the instructions for the credit form The lease term began: And the vehicle's FMV on the first day of
for more information. the lease exceeded:
Do not include salaries and wages reported elsewhere on the Automobiles other than trucks and vans
return, such as amounts included in cost of goods sold, elective During calendar year 2022 . . . . . . . . . . . . . . . . . . $56,000
contributions to a section 401(k) cash or deferred arrangement, or During calendar year 2021 $51,000
amounts contributed under a salary reduction SEP agreement or a . . . . . . . . . . . . . . . . . .
SIMPLE IRA plan. After 12/31/2017 but before 1/1/2021 . . . . . . . . . . . . $50,000
Line 10. Guaranteed Payments to Partners After 12/31/12 and before 1/1/18 . . . . . . . . . . . . . . $19,000
$18,500
Deduct payments or credits to a partner for services or for the use of After 12/31/09 but before 1/1/13 . . . . . . . . . . . . . . .
capital if the payments or credits are determined without regard to Trucks and vans
partnership income and are allocable to a trade or business activity. During calendar year 2022 . . . . . . . . . . . . . . . . . . $56,000
Also include on line 10 amounts paid during the tax year for During calendar year 2021 . . . . . . . . . . . . . . . . . . $51,000
insurance that constitutes medical care for a partner, a partner's
spouse, a partner's dependents, or a partner's children under age 27 After 12/31/2017 but before 1/1/2021 . . . . . . . . . . . . $50,000
who aren't dependents. After 12/31/13 and before 1/1/18 . . . . . . . . . . . . . . $19,500
For information on how to treat the partnership's contribution to a After 12/31/09 and before 1/1/14 . . . . . . . . . . . . . . $19,000
partner's health savings account (HSA), see Notice 2005-8, 2005-4 The inclusion amount for lease terms beginning in 2023 will be published in the
I.R.B. 368. Internal Revenue Bulletin in early 2023.
Do not include any payments and credits that should be
capitalized. For example, although payments or credits to a partner
for services rendered in syndicating a partnership may be See Pub. 463, Travel, Gift, and Car Expenses, for instructions on
guaranteed payments, they aren't deductible on line 10. They are figuring the inclusion amount.

Instructions for Form 1065 (2022) -23-