Medical (guaranteed) payments as Ordinary Income for Real Estate Passive Entity Partnership?

[qofmiwok]

Normally a business deducts the Guaranteed Payments on line 10.  But that makes it Ordinary Income, and for my Real Estate business there is no Ordinary Income, just Passive Income, so it's a loss on Ordinary Income.  I seem to remember reading it should just be deducted as a business expense on 8825 instead then, is that correct?