We have a situation where we have a two person General Partnership who works out of Anaheim. The partnership may be hired by a firm in northern California for a 3 month project. I understand that since the assignment is temporary and away from their tax home, that transportation, lodging, and 50% of meals would be deductible. In this case, the partnership should be able to deduct these expenses. If the lodging has to be in the name of one of the individuals, and not the partnership, would the best practice be to show the expenses on the individual return (Sch E, Page 2) as unreimbursed partnership expenses? The partnership agreement does have a UPE provision.
If the Northern California firm makes the two partners be employees and does not want to pay the partnership directly, it seems like we are out of luck on deducting these expenses for federal (Misc. Itemized Deduction issue) as there really would be no position to run any of the expenses through the partnership.
I think the best plan is to have the partner pay the expense an be reimbursed by the partnership because it’s a partnership expense. And you are correct, if the hiring firm treats them as employees there would be no deduction for those expenses.