Answers · Partnerships · Form 1065
What Expenses Can a Partnership Deduct?
Partnerships generally deduct ordinary and necessary business expenses, subject to capitalization and separately stated item rules.
How it works
The rule, and what it turns on.
Some items must be separately stated because tax impact depends on each partner.
Example
Office rent reduces ordinary income; charitable contributions are generally separately stated.
Common mistakes
What we see go wrong, and what we do instead.
- Netting separately stated items into ordinary income.
A better approach
- Map GL accounts to Form 1065 ordinary vs separately stated treatment.
Authority
Where this comes from, so you can check it.
IRC §162(a) (ordinary and necessary trade or business expenses); IRC §262 (personal expenses generally nondeductible).
Relevant case law
Welch v. Helvering, 290 U.S. 111 (1933) - foundational interpretation of “ordinary and necessary.”
Educational information, not individualized tax advice. Treatment depends on your facts, entity classification and tax year, and IRS instructions change. Confirm your own position with us before relying on it. Mint Associates does not provide legal services.
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