Discussion:Guaranteed payments
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Discussion Forum Index --> Tax Questions --> Guaranteed payments
| 22 October 2009 | |
| Can a partnership make guaranteed payments to its S corporation partner? If not, how does the partnership get a deduction for payments to an S coporation partner? | |
| 22 October 2009 | |
| I don't know of any reason why you couldn't (without doing some research). Guaranteed payments are for services rendered and subject to SE tax if paid to an individual. If you'd like to bypass the separately stated K-1 line - just book the expense to your category of whatever service it was. | |
| 22 October 2009 | |
| Why not just 1099 the S-Corp for the guarenteed payments? Then, the partnership would expense the payments as Contract Labor. | |
| 22 October 2009 | |
| What are the guaranteed payments for? GPs can be for services or for the use of capital. See Reg. 1.707-1(c).
I don't know of any reason why a GP can't be made to an S corporation for services the S corporation provides to the partnership. The S corporation would pay salaries to its employee(s) (including stockholder/employees) for the services they provided to the partnership via the S corp. | |
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