Debbie is a limited partner in ADK Partnership. Her partnership Schedule K-1 reports $19,000 ordinary business income, $2,000 long-term capital gain, and $830 dividend income. Which of these items are subject to self-employment tax?

Question

Quizplus · Accepted Answer

Limited partners typically do not have to pay self-employment taxes on their share of partnership income. This is because limited partners are not actively involved in the day-to-day operations of the business. Therefore, the ordinary business income, long-term capital gain, and dividend income reported on Debbie's Schedule K-1 are not subject to self-employment tax.

Debbie Is a Limited Partner in ADK Partnership