Guaranteed payments are always ordinary income to the recipient.

Name: Guaranteed payments are always ordinary income to the recipient.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Guaranteed payments are payments made to partners in a partnership for services rendered and are guaranteed to be paid, regardless of the partnership's income or profitability. As such, they are considered ordinary income to the recipient partner and must be reported as such on their tax return.

Guaranteed Payments Are Always Ordinary Income to the Recipient