Which of the following is not a specific adjustment to the partners' basis in the partnership interest?
A) Increased by contributions the partner made to the partnership.
B) Decreased by the amount of guaranteed payments shown on the partner's Schedule K-1.
C) Increased by the partner's share of tax-exempt income.
D) Decreased by any decrease in the partner's share of partnership liabilities.
E) Increased by the partner's share of separately stated income items.

Question

Quizplus · Accepted Answer

Guaranteed payments to a partner are treated as a return on capital for services rendered or capital contributed and are considered ordinary income to the recipient. These payments affect the partnership's income distribution but do not directly adjust the partner's basis in the partnership interest. Instead, the partner's basis is adjusted by the distributive share of partnership income, which may include guaranteed payments, but the specific adjustment for guaranteed payments as described is incorrect.

Which of the Following Is Not a Specific Adjustment to the Partners