Mileage & partnerships

[Lion EA]

OK, too tired. Daughter-in-law/partner just asked me a question for 2013. Son/partner is leasing a car, and will have significant business mileage for their LLC/partnership, the bakery. Out in the boonies between two mountain ranges, so a long drive to larger towns for bank, supplies, delivering/catering, etc.

Can the partnership have an accountable plan? Partner turn in expense accounts monthly for reimbursements? Or, is that just for employees?

Brain is fried.

To see DIL's yummy baked goods (Yes, she delivers! I've had her ship from CT to CA.): http://www.thebakeryhancockny.com/default.html

[Guest Taxed]

Based on my reading of the rules there has to be an employer-employee relationship to have an accountable plan.:

[Lion EA]

So, partnership passes a resolution that partners must use personal vehicles. Then partner deducts on Sch E as UPE. Right?

[mcb39]

You could do that or just have the Partnership reimburse him and use the deduction for the Partnership. Whichever way works best for them.

[Lion EA]

So, it IS an option for the partnership to reimburse him and take deduction?

[Lion EA]

Just confirming: partnership can reimburse or partnership can require partner to use UPE on personal return? Either one is OK?

[mcb39]

It is more to the benefit for the Partner to take the UPE. On the other hand, I have had the Partnership choose to "write the check" and take the deduction.

[Lion EA]

Thanx, Marilyn. The partnership has better cash flow, could reimburse him monthly against an expense account. For the UPE to be a benefit, he has to wait until he files taxes the following year to get a bigger refund. He may want the monthly reimbursements to pay off his gas card. As long as I know that both options are OK, I can lay it out for them to choose.

And, yes, I've already educated them re mileage log, etc. Luckily the wife was a business minor with her culinary arts major from Drexel so understands good recordkeeping as well as great cooking/baking.