Guaranteed payments to partners

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    Guaranteed payments to partners

    Multi partner partnership has a few partners that receive payments from the partnership for services rendered.  The partners are looking for 1099s as consultants,  and we are telling them that the payments will be on their K-1 forms as Guaranteed Payments to Partners.  For some reason they are not happy with that and are insisting on the 1099s.

    I don't think it is proper to do the 1099s for them.

    Comments?  And thank you!

     

     
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    Re: Guaranteed payments to partners

    In response to dehcpa's comment:
    [QUOTE]

    Multi partner partnership has a few partners that receive payments from the partnership for services rendered.  The partners are looking for 1099s as consultants,  and we are telling them that the payments will be on their K-1 forms as Guaranteed Payments to Partners.  For some reason they are not happy with that and are insisting on the 1099s.

    I don't think it is proper to do the 1099s for them.

    Comments?  And thank you!

    Dear dehcpa:

    You are corrrect.   While they are familiar with the system of reporting for payments for services that operates to report such payments that recorded their fees when they were sole proprietors, they are now operating in the world of partnerships, where the ENTITY will recieve the Forms 1099 ( and will have to justify to the IRS that it is properly reporting all of the revenue).  It, in turn, now substitues the Schedule K-1 as the reporting medium to parcel out the income it has received and paid over to them in the form of guaranteed payments (amounts they are to receives, whether the entity makes or loses money).  The net profit, after charges for such payments, is then also reported out to them, in proportion to their ownership interests in the entity's profits or loses.

    Hope this helps in preparing your returns!

    Mark H. Misselbeck, C.P.A., M.S.T., Tax Principal

    Katz, Nannis + Solomon, P.C. 



     

     
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