A guarantee of a minimum income of $15,000 or a salary allowance of $15,000 to a partner will give the partner the same share of partnership net income, whether the limited liability partnership has a net income or a net loss.

Question

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A guarantee of a minimum income or a salary allowance to a partner ensures they receive a specified amount regardless of the partnership's performance. However, if the partnership incurs a net loss, the guaranteed amount does not equate to a share of net income, as there is no net income to share; the partner still receives their guaranteed amount, but it is not a share of profits, since there are none.

A Guarantee of a Minimum Income of $15,000 or a Salary