A partnership deducts guaranteed payments paid to its partners in computing ordinary income, and partners report guaranteed payments received as ordinary income.

Name: A partnership deducts guaranteed payments paid to its partners in computing ordinary income, and partners report guaranteed payments received as ordinary income.
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Question

Quizplus · Accepted Answer

This is correct according to IRS regulations. Guaranteed payments are treated as a deductible expense for the partnership and as ordinary income for the receiving partner.

A Partnership Deducts Guaranteed Payments Paid to Its Partners in Computing