Guaranteed Payments

[osty38]

We have a real estate company, 2 partners, LLC.  Are the commissions that the two partners earn entered as guaranteed payments?

[Anonymous_]

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@osty38 wrote:

Are the commissions that the two partners earn entered as guaranteed payments?

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Guaranteed payments are basically salaries for partners regardless of whether or not the partnership is successful. You would find typically find a reference to guaranteed payments in the partnership agreement.

Regardless, it is unlikely that the commissions, themselves, (which obviously vary from year to year) would be considered guaranteed payments since guaranteed payments are determined without regard to the income of the partnership.

See Treas. Reg. §1.707-1(c) --> https://www.law.cornell.edu/cfr/text/26/1.707-1