In a recent tax case it was decided that partnership expenses cannot be taken directly on a partner’s tax return.
A taxpayer reported on Schedule C income and expenses from two side businesses that he operated with his brother. Even though no partnership return was filed, the Tax Court decided the brothers intended to conduct business as a partnership.
It then nixed the taxpayer’s write-offs for certain costs associated with the ventures because they are partnership deductions that must be taken on Form 1065 and included in figuring its income or loss
Nwabasili, TC Memo. 2016-220