When a partner in a partnership dies, which part of the income must be included in self-employment calculations?

When a partner in a partnership passes away, the income that must be included in self-employment calculations consists of the entire distributive share until the month of death. This reflects the partner's earned share of the partnership income up to the point of their death, acknowledging their contribution to the business during that time.

Partnerships are pass-through entities, meaning that income, deductions, and credits pass through to the partners. The distributive share is calculated based on the partner's ownership interest and the partnership's overall income for that period. As a result, the income received until the month of death is included because it represents earnings the partner would have realized if they had lived through the full accounting period.

This approach aligns with tax principles that treat partners as self-employed individuals for the purposes of income and self-employment tax considerations. Guaranteed payments and capital gains have different treatment and are not the primary focus when determining self-employment income related to the deceased partner's interest in the partnership during their lifetime.