This is probably a dumb question, but I'll ask it anyway.

I am running an earned income calculation for a partnership. There are two partners (50-50), each has K-1 self-employment earnings of $120,321 (line 14A); however, they both have a Section 179 deduction (Line 12) of 1,656. When calculating the partners' earned income, do I subtract the 179 deduction from their self-employment earnings or not? I guess my question is: is my starting point $120,321 less the staff's contribution, etc. or is it $118,665? I've seen it done both ways, but I don't know which way is right.

Thanks for your help! Any input would be greatly appreciated.

I have also seen it done both ways but my understanding is that the Section 179 number should be subtracted from the partner's earned income.

Yes, that is correct.

Thank you both!! ;-)