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Employees and sole proprietors (filing Form 1040 Schedule C) can use either the standard mileage method or actual auto expenses.

Corporate and partnership employers can’t use the standard mileage method to compute the auto expense for company-owned cars. Actual auto expenses are deducted at the partnership level. However, employers can use the standard mileage rate to reimburse employees for business use of the employee’s vehicle.

To compute reimbursement if the partner used his or her vehicle and is reimbursed by the partnership:

In this case, 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.

To enter unreimbursed partnership expenses:

Enter unreimbursed partnership expenses from nonpassive activities on a separate line in Column H of Line 28 on Schedule E. Don’t combine these expenses with, or net them against, any other amounts from the partnership.

To enter expenses from a passive activity:

If the expenses are from a passive activity and you aren’t required to file Form 8582, enter the expenses on a separate Schedule E, Column F of Line 28. Don’t combine these expenses with, or net them against, any other amounts from the partnership.

Enter UPE (unreimbursed partnership expenses) on Line 28 Column A.

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


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