I am a little confused about what information from the K-1 we use to begin our circular contribution calculation.

One person in our office says take line 1 from the K-1, add line 5, and add line 9, and that's your starting point. The other person says no, add line 5 to line 1, and subtract 9.

What lines from the K-1 are other practitioners using as the starting off point for compensation? I can't seem to find any guidance anywhere online for this.

Thanks.

According to Publication 560, Deduction Worksheet for Self-Employed, a partner would use the net profit from Line 15a of Schedule K-1 as the starting point. It goes on to say that a general partner should reduce this amount by the same additional expenses subtracted from Line 15a to determine the amount on Line 1 or 2 of Schedule SE. Does this help?

Thanks! Yes it does. I think we are just breaking it down a little too finely. I like the idea of starting with a single amount on a specific line!