[needhelpnow]

Is my understand of this correct?

Guaranteed Payments (GP) does NOT come out of the basis of partnership, but DOES come out of Net Income for the current year?

For Example:

2014 Partnership basis 50/50 for A and B: 50K

2014 NO Net income

2014 GP for A: 10K

Therefore

A Ordinary Income = 10K

2014 Basis for partnership: 50K ??

Is that correct?

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2nd Example:

2014 Partnership basis 50/50 for A and B: 50K

2014 Net Income 50K

2014 GP for A: 10K

Therefore

A Ordinary Income = 50K-10K=40K / 2 = 20K+10K = 30K (Income for A)

2014 Basis for partnership: 50K + 40K = 90K??

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Based on the 2nd example, Basis of A in the partnership is equal to Original Partnership basis 25K+ 20K (This is minus the GP for A). Why is that? I thought the GP is not supposed to affect the basis of partnership?

Please let me know if that is right. Thank you in advance!

[northernlights]

Yes, Guaranteed payments are like salary, and come out when you are calc'ing partnership net income. Can also count as self employment income. They only change basis to the extent of the partners interest in that net income.

FAR: 55, 52, 66
REG: 84*
AUD: 54, 70, 73, 72, 79!!!
BEC: 75*

*expired

[mrbeaver]

I've been frustrated with this topic as well. I feel as if I've received conflicting answers from two separate WTB problems. I'd appreciate some guidance on it as well. As I understand it, a guaranteed payment DOES impact the receiving partner's basis. Their basis is then increased or decreased by their proportionate share of net income as well. Thanks for the help.

AUD - 71, 91
BEC - 89
FAR - 89
REG - 86

[Author]

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