Question

Andrew is a 1/3 partner in AJ&J Partnership. He received a guaranteed payment in the current year of $50,000. Partnership income before considering the guaranteed payment was $20,000. a.) What is Andrew’s share of the Partnership’s ordinary income or loss? b.) How is the $50,000 guaranteed payment Andrew received taxed to him?

Answer 1

1.)	Andrew’s share of the Partnership’s ordinary income or loss
	Partnership Income before guaranteed payment	20,000
	Less: Guaranteed payment to Andrew	50,000
	Partnership ordinary Income or (loss)	- 30,000
	Andrew’s share of the Partnership’s ordinary loss	-10,000	(30,000 x 1/3)
2.)	Guaranteed payment Andrew received taxed to him
	Andrew will report guaranteed payment received of $ 50,000 as income from partnership on his icnome tax return in Schedule E of Form 1040.