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Why does lacerte reduce a partner's tax basis for self employed health insurance properly reported as a guaranteed payment?

Katherine
Level 1

Why does lacerte reduce a partner's federal tax basis for self employed health insurance properly reported as a guaranteed payment? 

The allocable net income of the partnership is properly reported as an increase of a partner's basis and includes the deduction for the partner's self-employed health insurance (since it was included in the 1065 p1 guaranteed payment line). I see the partner's basis reduced again on line 10 of the basis worksheet ("Your share of the partnership's losses and deductions..."). If basis is to be adjusted twice--once for the add-back of the partner's distributive share of the SE health insurance and then reduced by the full amount of the specific partner's SE health insurance, I can see how that would make sense. However, there is no increasing basis adjustment like the interest expense calc. 

Should the partner's basis be reduced twice for SE health insurance, or should I calculate the partner's distributive share of reduced net income and manually enter the additional basis increase for the calculation so the net difference can be recognized? (For the specific partnership, the majority partner has a lower SE health insurance premium than the minority partner--so I can see a reason for a basis adjustment.)

1 Comment 1
dcage
Level 2

I have this same question.  It does not make sense that basis would be reduced twice by the health insurance amount.

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