CRP Ag Program Payment - SE Tax - Partnership

[JackieCPA]

So, when someone receives CRP Ag Prog Payments it isn't self-employment taxable as long as they are on social security. If that CRP is flowed in from a partnership on a K1 it shows as self-employment taxable because the business return preparer wouldn't know if the recipient is on social security or not. Is there a way to add on the K1 (ATX) that it is CRP payments and not just farm income and to be deducted on the Sch SE on their personal return? Or, should the business return preparer know if they are on social security and show it on the K1 as not self-employment income? 

[Lee B]

Since no one else has answered I will take a shot at it.

It sounds like the PTS preparer has prepared the 1065 correctly.

I think you have to enter the Form 1065 K 1 info as prepared.

Then in the SE Income worksheet I would back out the CRP payments with the explanation that the recipient is on Social Security.

 

[DANRVAN]

9 hours ago, JackieCPA said:

Is there a way to add on the K1 (ATX) that it is CRP payments and not just farm income and to be deducted on the Sch SE on their personal return?

If you are working on the individuals 1040, just let it flow from the K-1 to SE,  then enter on line 1b of form SE, which is specifically designated for the CRP subtraction; same as you would if it came from Schedule F of 1040.

 

The 1065 preparer should show as other information the amount of SE income from CRP, especially if going to non-client.

[DANRVAN]

3 hours ago, cbslee said:

would back out the CRP payments with the explanation that the recipient

You can put it directly on line 1b without explaining.