Partnership Guarented Payments

[unregistered]

If partners are 50/50 does the guarented payments have to be 50/50.One partner wants to receive a high payment next year but other partner doesn't.

[JG EA]

Wages

Guaranteed payments are like wages, they are given for something that particular partner did, usually work. So, they would be different. Then the bottom line is split 50/50. But, Guaranteed payments do not increase or decrease basis. That because it is viewed as wages paid to a third party. So, if you're going to split things 50/50 and want to increase the basis, don't do Guaranteed payments.

[S T]

Guaranteed Payments

As JG has stated, I believe the partners can choose how much they want to receive for guaranteed payments, they do not have to be equal among the partners. It is like a wage with no payroll withholdings and then subject to SE on the K-1 which flows through to the individual tp return.

Sandy

[dsi]

With a corporation, each year issues like this are documented in the minutes. However, with a partnership, I'm not sure how it gets documented. Perhaps in an amended partnership agreement?

[Gretel]

Partnerships should have an annual meeting too, right? So, then they should have some records about these meeting. Maybe they are not called minutes.

[OldJack]

Partnerships should have an annual meeting too, right? So, then they should have some records about these meeting. Maybe they are not called minutes.

As far as the Federal Government there is no law, rule, reg, etc., that requires minutes for a corporation or partnership or any other business for that matter. However, if the owners or partners get into a lawsuit, minutes would be the proof of actions authorized. The IRS quit asking for and looking at minute books on audits more than 30 years ago.

It is just good policy and practice to maintain such minutes of any meetings and a good place to document those "written plans" that the fed regulations require for certain benefit plans.

[Matt Sova]

No they didn't

As far as the Federal Government there is no law, rule, reg, etc., that requires minutes for a corporation or partnership or any other business for that matter. However, if the owners or partners get into a lawsuit, minutes would be the proof of actions authorized. The IRS quit asking for and looking at minute books on audits more than 30 years ago.

It is just good policy and practice to maintain such minutes of any meetings and a good place to document those "written plans" that the fed regulations require for certain benefit plans.

The CPA I worked for years ago had a client get audited for his 1990 return. This was a C-Corp and the agent asked for the minutes authorizing the salary taken by the owner of the company. This was a single shareholder and he was the CEO, Board of Directors, President, VP, Sec, Treas, head bottle washer. My boss told her we had to get that from the atty and it would be a couple of days. After she left he typed up the minutes.

[OldJack]

That must have been a young female auditor that didn't know better as salary does not have to be authorized by anyone but the boss that authorizes the check. Most of my clients are C-corps and most do stockholder minutes but it is mainly about who will be the directors of the company and then the directors minutes for who will be what officer position. It is mostly a boiler plate the same every year. Of course they mention that I am elected to be their independent CPA so that they can meet with me for a long weekend at the resort and take the deduction. LOL

[Matt Sova]

Laughing out loud!!

That must have been a young female auditor that didn't know better as salary does not have to be authorized by anyone but the boss that authorizes the check. Most of my clients are C-corps and most do stockholder minutes but it is mainly about who will be the directors of the company and then the directors minutes for who will be what officer position. It is mostly a boiler plate the same every year. Of course they mention that I am elected to be their independent CPA so that they can meet with me for a long weekend at the resort and take the deduction. LOL

You nailed it right on the head. It was a young female auditor.