turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

PPP and Guaranteed Payments to Members

Our 2 Member llc files as a Multi-Member Partnership using Form 1065.

The PPP funds are non-taxable, and the payroll to our employees is a deductible expense.

However, I can't wrap my head around this part. Do the member draws of PPP funds to members get included into the Guaranteed Payments in TT Business?

x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

4 Replies
JeffreyR77
Expert Alumni

PPP and Guaranteed Payments to Members

Yes, see this explanation from dd4vols this spring PPP Included in Guaranteed Payments?

PPP and Guaranteed Payments to Members

@JeffreyR77 

Thank you for taking the time to assist. However I'm not sure this answers my question.

That link pretty much described how calculate owner compensation, and how to record/use the funds.

 

What I am specifically asking is if those member draws/guaranteed payments are to be reported as such.

If the PPP funds are to be considered non taxable, it seems to me that the PPP funds used for owner compensation as guaranteed payments being reported to the IRS as guaranteed payments, I am being taxed on the funds.

 

JeffreyR77
Expert Alumni

PPP and Guaranteed Payments to Members

You are correct.  You (a member receiving a guaranteed payment) are being taxed on the amount of PPP funds to the extent they are used for the purpose of guaranteed payments as employees would have been taxed on their income if those funds were used to pay wages. 

 

With the exception of the guaranteed payments, the LLC members are not being taxed on the balance of the PPP funds.  The PPP funds are to be considered non-taxable to the entity, not to the recipients that receive payments using those funds.

PPP and Guaranteed Payments to Members

@JeffreyR77 

Thank you again.

While it makes sense now, for some reason I wasn't thinking it through clearly, and you helped in clarification on the subject!

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies