Question

1.Guaranteed payments to partners go on what two lines of the Form 1065? Why are they reported on each place?\

2.How much is the deduction for income attributable to qualified business income? Where on the Form 1065 will the deduction be reported?

Answer 1

Guaranteed Payment means to deduct payments for the services or for the use of capital of partners. Such payment would be in the form of insurance or medical relief for spouse or dependents. Capital expenses are not included if its not guaranteed otherwise its mentioned in Schedule K, Line 4 . And distributive shares of partnership of profit is also not a guaranteed payment.

Qualified Business Income deduction is available to eligible taxpayers, individuals, trustees or estate. It must be mentioner with Code Z with * on each partners Schedule K-1 and enter STMT in entry space and mention information. It must include initial determination of income, gain, deduction or loss and mention whether business is SSTB. Qualified Business Income is a regular; continuous activity to make profit.

Deduction available is lower of Combined Qualified Businees Income Deduction or Taxable Income - Capital Gain * 20%

Qualified Business Income Deduction = Qualified Business Income less Qualified Business Income Deduction%

Combined is for all related business in which partners are involved.