Can sole proprietorship OPEX be deducted against separate partnership K-1 income (same industry)?
Hi, I was wondering what the GAAP procedure would be for me to apply my sole proprietorship OPEX against Schedule K-1 income from a partnership. I maintain my sole proprietorship to retain ownership of my truck, tools, etc. and maintain a general liability and commercial auto insurance policy so my proprietorship remains viable in the event the partnership dissolves. We distribute net proceeds at the end of each project and our partnership agreement provides that we are each responsible for our own OPEX (COGS, with the exception of tools, is deducted from the contract amount to determine net proceeds). Essentially my partnership distributions go to me personally but my sole proprietorship bears the cost of allowing me to get to and complete my job responsibilities. Is it better (more accurate or preferred for tax reporting purposes) to record my sole proprietorship business overhead as a non-passive loss against my partnership Schedule K-1 income or should I invoice my business partner's LLC from my proprietorship for 50% of net proceeds per job and record it as income in my sole proprietorship? Thank you in advance for any professional opinion you can provide, Maurie
