Guaranteed Payment Examples

Guaranteed Payment Examples - TAX 6317 GUARANTEED PAYMENTS...

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TAX 6317 GUARANTEED PAYMENTS EXAMPLES FACTS : X and Y are partners in a partnership in which they share profits or losses equally after providing for any guaranteed payments. All amounts provided below are prior to reduction to any guaranteed payments to X. DISCUSSION QUESTIONS : Determine in the following alternative situations, the amount and character of income to be reported by each partner. a. XY earns $100,000 of income prior to payments to partners. The partnership agreement provides that X is to receive the first $10,000 of partnership income. X and Y share net income above $10,000 equally. X’s Guaranteed Payment is $10,000. Partnership Net Income is reduced to $90,000 and is equally divided between X and Y. b. XY earns $100,000 of net income. The partnership agreement specifies that X is to receive a "salary" equal to the greater of $75,000 or 30% of partnership net income prior to reduction for any "salary" to X. X now receives a Minimum Guaranteed Payment.
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Guaranteed Payment Examples - TAX 6317 GUARANTEED PAYMENTS...

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