Discussion:Partnership: Guaranteed Payments and Section 179
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Discussion Forum Index --> Tax Questions --> Partnership: Guaranteed Payments and Section 179
| 28 September 2006 | |
| I have a partnership return I am reviewing for last year. I'm not sure of one of the calculations:
Here are the facts: Husband and Wife each have a K-1: Pertinent figures from each K-1 (K-1 were the same) Ordinary income $10,000 Guaranteed Payments: $100,000 Sec 179 10,000 They also had a Schedule F business which had about $100,000 in Schedule F losses, and $50,000 in 4797 and Schedule D gains. They had a total of another $30,000 in Schedule F eligible Sec 179. No section 179 was allowed for the return due to business income limitation. Is there any reason why the guaranteed payements would not be allowed as income for computation of the business income limitations? Wages are allowed, certainly guaranteed payments would be? I compute business income as follows: From partnership $200,000 Farm loss (100,000) Business income: $100,000 Therefore all sec 179 should be allowed? I appreciate any feedback, I'd hate to amend this return and be wrong! Thanks Carolyn | |
| 29 September 2006 | |
| I forgot to add the $50,000 in gains above: Therefor before section 179 income should be $150,000 | |
| 29 September 2006 | |
| Carolyn: The guaranteed payment is just that, a payment, and not necessarily a reflection of income. I.e. the guaranteed payment is payable notwithstanding the profit of the LLC/partnership, as I understand it (hence "guaranteed"). As far as how this applies to your figures, I don't exactly know, and I defer to others more knowledgable in partnership accounting. | |
| 29 September 2006 | |
| I can't see any reason, based on what you have said, as to why it would not be allowed. If it's a passive activity then the secion 179 wouldn't be allowed but as far as I know guaranteed pymts are not passive. Did they pay SE tax on the guaranteed pymt? | |
Taxguy1024 (talk|edits) said: | 29 September 2006 |
| This is just a guess.....do you perhaps have the partnership K-1s marked as "passive income" on the individual's return? If that was the case, then you would be showing zero earned income (business income of $100,000 and a farm loss of $100,000) which might explain why the Section 179 is not being allowed.....like I said....just a guess.... | |
