Hello,
I have a 2-person LLP partnership.
I am using TurboTax Business for the first time. Last year we had an accountant.
The way we distribute money to the partners (profit that we pay personal taxes on with K-1), is that after each job, we split the profit.
I looked at last years K-1 form and I can see that the accountant registered these distributions as guaranteed payments.
Now I am filling out the Turbotax form for this year and it says that guaranteed payments are "Guaranteed payments are payments made to partners that are not based on the partner's share of the business's income."
Well these distributions ARE based on our share of business income. our share is 50-50 and at the end of every job we split the profit 50-50.
so was my accountant incorrect to label these as guaranteed payments?
and if so, what should they be labeled as instead?
It looks like in Turbotax that once I input them as guaranteed payments, the profit for the business goes down (becomes negative for the year). but this is profit that we split 50-50.
if anyone has advice on this I'd appreciate it.
thanks
gary in vermont
