Does guaranteed payment from partnership decrease partnership basis?

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  • January 29, 2013 at 6:20 pm #175873
    General_Ledger
    Participant

    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!

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  • January 29, 2013 at 6:45 pm #393406
    General_Ledger
    Participant

    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

    January 29, 2013 at 6:55 pm #393407
    Anonymous
    Inactive

    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.

    January 29, 2013 at 7:32 pm #393408
    General_Ledger
    Participant

    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

    January 29, 2013 at 7:42 pm #393409
    Noct
    Participant

    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
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    January 29, 2013 at 7:50 pm #393410
    General_Ledger
    Participant

    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

    September 7, 2017 at 4:41 pm #1622093
    terence
    Participant

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

    I think CPA Driven is wrong.

    September 7, 2017 at 7:21 pm #1622215
    maj1028
    Participant

    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

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    @maj1028

    "In the infinity of life where I am, all is perfect, whole, and complete.  All is well in my world." - Louise L. Hay

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