AboutJohn Stancil, CPA Expertise I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Association of Tax Professionals, and the Institute of Management Accountants.
Visit my website at www.johnstancilcpa.com.
Also visit my blog, www.thetaxdocspot.com.
Experience I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper. I have prepared taxes for over 30 years.
Education/Credentials DBA University of Memphis
MBA University of Georgia
BS in Accounting Mars Hill College
Question Could you please clarify your answer to a past question.
Here is the question and answer. Below is my new question.
Tax Law (Questions About Taxes) - K1 v.s. 1099
Expert: John Stancil, CPA - 6/30/2009
Question
John,
Hope your doing well. I have a general question. I work for a company for 14 years as a consultant, the previous owner sold the company to a investment group and in the process I was awarded 5 percent ownership and a title of CEO. All the years in dealing with 10-99 now I have received a K-1 and was told that I have no deductions as a owner. Is this true? If not what kind of deductions can I take. I provide my own vehicle and cell phone and dinner expenses for customers. I am looking at over 40k in taxes which is over double from the past. Can you give me any suggestions?
Regards,
Brian
Answer
Brian,
Thanks for your question.
You don't state whether the organization is a partnership or an S Corporation. If an S Corporation, you should be on salary and receiving a W-2, making you an owner/employee. You can take certain employee business expenses as miscellaneous itemized deductions on Schedule A. IRS Publication 17 has a list of deductible employee business expenses that are available - the list is rather extensive and too long to reproduce here. Mileage other than commuting and entertainment would be included as deductible expenses.
If it is a partnership, you don't get any deductions. Any expenses should be borne by the partnership.
What has happened is that you have gone from being self-employed (which was probably a misclassification) to owner/employee.
Hope this helps.
John Stancil, CPA
Question:
If he is a partner, can't he deduct additional expenses on his page 2 of schedule E as unreimbursed business expenses??
Why did you say "you don't get any deductions"?
Answer Bart,
Schedule E is not the proper place to deduct those. Any unreimbursed expenses in a partnership should be 1) reimbursed by the partnership or 2) treated as additional contribution to the partnership and funneled through the partnership books, reflecting it on the K-1 if they choose.
