Would it be possible to issue a 1099-misc to a partner in a partnership? It's a three member partnership with each owning 1/3. Partnership net income is 130k but one partner paid himself 90k (of the net) for services. They have no written agreement for guaranteed payments. I was hoping we could issue him a 1099-misc because he would then qualify for QBI deduction. Whereas guaranteed payments do not qualify for QBI. Or is it possible to move a huge chunk of the distributive share over to him and have it show as ordinary income (qualify for QBI)? Again, no written agreement on anything! I know I know...
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I think, the fact that her received more money than his partnership share, makes it a guaranteed payment not eligible for QBI. Does not matter how YOU want to classify it. -
I am not sure about issuing 1099 misc but here is what I found on IRS website:
Question
Are partners considered employees of a partnership or are they considered self-employed?
Answer
Partners in a partnership (including certain members of a limited liability company (LLC)) are considered to be self-employed, not employees, when performing services for the partnership.- If you're a general partner of a partnership (or the equivalent in an LLC) that carries on a trade or business, your net earnings from self-employment include your distributive share of the income or loss from that trade or business. General partners must also include guaranteed payments as net earnings from self-employment.
- If you're a limited partner of a partnership that carries on a trade or business, only guaranteed payments for services you rendered to, or on behalf of, the partnership are net earnings from self-employment. Limited partners don't pay self-employment tax on their distributive share of partnership income, but do pay self-employment tax on guaranteed payments.
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