In short
A guaranteed payment is a payment by a partnership to a partner for services or the use of capital that is determined without regard to the partnership's income.
Key takeaways
- The partnership deducts it if it is an ordinary business expense; the partner reports it as ordinary income.
- Payments for services are subject to self-employment tax.
- They are not qualified business income for the 20% deduction.
Where it's tested
REG: Partnership Taxation — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A guaranteed payment to a partner for services is: