If a partner takes a guaranteed payment, that partner's after-tax cash flow will increase even though the partner's self-employment (SE)tax will increase and the qualified business income deduction (QBI)deduction will decrease.

Question

Quizplus · Accepted Answer

Although taking a guaranteed payment will increase the partner's SE tax and decrease their QBI deduction, the increase in after-tax cash flow will still occur. This is because the guaranteed payment is treated as a deduction for the partnership, which can offset other income and reduce the partner's overall tax liability.

If a Partner Takes a Guaranteed Payment, That Partner's After-Tax