Schedule E - Standard Mileage for Vehicle Expenses
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Employees and sole-proprietors (filing Form 1040 Schedule C) have the option to use either the standard mileage method or actual auto expenses. Corporate and partnership employers may not use the standard mileage method to compute the auto expense for company owned cars. In other words, actual auto expenses are deducted at the partnership level. However, they may use the standard mileage rate to reimburse employees for business use of the employee's vehicle.

If the partner used his or her own vehicle and is reimbursed by the partnership, the reimbursement can be computed based on the standard mileage rate. Then the partnership can enter the "actual" expenses (in this case, the amount of the reimbursement) on the partnership return.

Enter unreimbursed partnership expenses from nonpassive activities on a separate line in column (h) of Line 28, Schedule E. Do not combine these expenses with, or net them against, any other amounts from the partnership.

If the expenses are from a passive activity and you are not required to file Form 8582, enter the expenses related to a passive activity on a separate Schedule E, column (f) of Line 28. Do not combine these expenses with, or net them against, any other amounts from the partnership.

Enter “UPE” (unreimbursed partnership expenses) in column (a), Line 28.

The partner can determine the amount of unreimbursed auto expenses using the standard mileage rate or actual expenses.