[General_Ledger]

Does guaranteed payment from partnership decrease the partner’s partnership basis? The partner that receives it…

I would assume it does since it is a distribution from the partnership.

Thank you for your help!

FAR 73, 75*, 79! n DONE!
BEC 72, 75
AUD 64, 75
REG 43, 74, 72, 70, 88!
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[General_Ledger]

My friend just confirm it DOES decrease the partner's partnership basis…

Let us know if that is incorrect please…

FAR 73, 75*, 79! n DONE!
BEC 72, 75
AUD 64, 75
REG 43, 74, 72, 70, 88!
*Expired...FML

HELLO 300 CLUB! 6/8/13

[Anonymous]

No it doesn't. Guaranteed payments are paid to a partner for services rendered. It is ordinary income to the partner and is a tax deduction to the partnership.

[General_Ledger]

CPA_Driven is CORRECT. the guarantee payment has NO effect on partnership basis, so it does NOT decrease partnership basis.

Thank you! =D

FAR 73, 75*, 79! n DONE!
BEC 72, 75
AUD 64, 75
REG 43, 74, 72, 70, 88!
*Expired...FML

HELLO 300 CLUB! 6/8/13

[Noct]

A guaranteed payment affects basis indirectly. The payment is a deductible expense to the partnership and therefore reduces the taxable income reported by each partner. Since net income/loss affects basis, so does a guaranteed payment.

FAR - 79 - 07/2012
AUD - 65, 78 - 11/2012
BEC - 76 - 11/2012
REG - 78 - 01/2013
ETH - 98 - 01/2013

Material: Wiley books

[General_Ledger]

Thank you to CPA Driven and Noct

FAR 73, 75*, 79! n DONE!
BEC 72, 75
AUD 64, 75
REG 43, 74, 72, 70, 88!
*Expired...FML

HELLO 300 CLUB! 6/8/13

[terence]

A guaranteed payment actually decrease partner's basis, because it affect the net income of the partnership.

I think CPA Driven is wrong.

[maj1028]

I think a better explanation would be that guaranteed payment decreases a partner's partnership basis indirectly because it decreases the partnership's ordinary income. However, separately or individually, it should not be used to calculate, i.e. decrease, partner's basis.

Adjustment to partner's basis: adjust for any increases or decreases in liabilities, subsequent contribution, share in income including tax exempt, distribution, share in losses including non-deductible expenses

[Author]

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