Pa Partnership income

[HBurkholder]

Are "guaranteed payments for services rendered" to a partner taxable at the state and local level in PA? It certainly seems to me it would be income and would be taxable and have always handled it this way. However, today in doing a return and entering data I noticed ATX input calls for the figure on line 1 and line 14 of the PA RK1. Guaranteed payments are on line 12. In reading what PA considers compensation I am not finding a conclusive answer. Too late in the season-brain dead

[HBurkholder]

Trying to get this back to the top where it will be seen. Does no replies mean no one knows or is the question too dumb to deserve an answer?

[KBTS]

It's not a dumb question - I think PA's instructions are not clear about this. I found this information in the PA Income Tax guide http://www.revenue.state.pa.us/reven...chapter_16.pdf

If you go to page 5, you will see a discussion of how to treat guaranteed payments. If they are for services rendered in the operation of a business, they are classified as income from that class and go on line 4 of the PA-40. If it is for rental activity, it goes to line 6 of the PA-40. I believe you would just carry the amount to the local return as taxable income as well in the appropriate class.

Proseries has a worksheet built into the RK-1 for lines 11 and 12 to classify where the guaranteed payment should go. Maybe your software has the same thing hidden somewhere.

Hope this helps.

[HBurkholder]

Thanks

I appreciate your response

[BP.]

Agree with KBTS; not a dumb question at all, just unclear instructions from PA & local. Didn't have a chance earlier, but would've done as KBTS did and had a look at that confounded PA PIT guide. Agee with advice from KBTS on treatment.