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Employees and sole proprietors filing Schedule C (Form 1040) Profit or Loss From Business 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, compute the reimbursement 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 non-passive activities on a separate line in Column (h) of Line 28 on Schedule E (Form 1040) Supplemental Income and Loss. 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 Passive Activity Loss Limitations, enter the expenses on a separate Schedule E, Column (h) 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.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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