Guaranteed payments

[DTS]

I was doing some reading on guaranteed payments and ran across something interesting with regards to a partner providing services, not receiving guaranteed payments, but instead reclassifying g/p as "distributions" that are usually accompanied by an income allocation.

This seems a good way to increase basis, whereas, a g/p will not. Did I understand this correctly?

If someone is familiar with this, would you mind shedding some light on this for me?

Thank you.

[Acownt4it]

Services

You are correct, this is a good way to increase basis. However, the fair market value of services rendered in exhange for a capital interst in a partnership is taxable to the partner as a guaranteed payment and deductible by the partnership. TB Deluxe Edition pg 20-8.