I have a LLC taxed as a partnership (LLC - A). Among the partners, it has a management LLC (LLC - B) , taxed as a C-corp. Every month, LLC-A will pay LLC-B a fixed sum of monies for guaranteed payment. How should I report this in LLC-B tax returns ? Income ??
The member section does not allow specific allocation for guaranteed payment.
Found the answer and sharing with the community.
Under Deductions, Compensation and Benefits section, there is a Guaranteed payments sub-section.
There is an Allocate by Amount button. Click on this and follow the rest of the instructions to allocate the guaranteed payment to a specific partner
Yes. This should be reported as ordinary income on the C corporation 1120.
Thanks for reply!
LLC-A has 3 partners (partnerA 40%, partnerB 25%, LLC-B 35%).
In 2023, LLC-A paid a total of $10k to LLC-B for guaranteed payment.
Schedule K-1 generated by TT for LLC-B listed
Line 4a Guaranteed payments for services $3,500. (seems to be linked to LLC-B ownership in LLC-A)
I feel this should be reflecting $10,00 instead for LLC-B schedule K-1.
Is this the right expectation ?
BTW the operating agreement/minutes of LLC-A reflects this fixed monthly guaranteed payment to LLC-B only... and never to partnerA and partnerB.
Pls advise.
I am not in a Windows environment to review TT input, however, I believe you need to go into the member section and specifically allocate the guaranteed payment to LLC-B.
Not doing this, TT will allocate based on ownership %; which is what appears to be happening.
The member section does not allow specific allocation for guaranteed payment.
Found the answer and sharing with the community.
Under Deductions, Compensation and Benefits section, there is a Guaranteed payments sub-section.
There is an Allocate by Amount button. Click on this and follow the rest of the instructions to allocate the guaranteed payment to a specific partner