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cecgroup
New Member

Guaranteed Payments Issue

I file LLC Tax Returns for entities that own rental property.  The tax return comes up with a profit or loss from Rental Real Estate, based on the income and expenses that I enter for each property.  This number prints to Line 2 of the K-1 based on that partner's ownership percentage.  I also enter Guaranteed Payments for rents that were distributed to partners during the year, which shows up on Line 4.  The problem is that the Guaranteed Payments amount should be reducing the amount of Income from the Rental Properties (Line 2), and it doesn't.  How do I reduce the amount shown on Line 2 by the amount entered as Guaranteed Payments (on Line 4)

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Accepted Solutions
Rick19744
Level 12

Guaranteed Payments Issue

There is no clean way to handle this if no trade or business activity is reported on page 1 of the 1065.

I would recommend that you just reflect this on the form 8825 line 15 "other" expense.

If you put it on the wage line, the IRS will be looking for payroll forms and that is not applicable for guaranteed payments.

*A reminder that posts in a forum such as this do not constitute tax advice.*

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1 Reply
Rick19744
Level 12

Guaranteed Payments Issue

There is no clean way to handle this if no trade or business activity is reported on page 1 of the 1065.

I would recommend that you just reflect this on the form 8825 line 15 "other" expense.

If you put it on the wage line, the IRS will be looking for payroll forms and that is not applicable for guaranteed payments.

*A reminder that posts in a forum such as this do not constitute tax advice.*
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