rschule1
Expert Alumni

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Turning to a new direction it feels as if you are approaching IRC section 707(c) guaranteed payment issues, which might be a favorable consideration since traditional capital distributions might have the effect of reducing  ownership. The partnership agreement as discussed at an annual meeting would be the time and place for the partners to agree whether or not such payment are a reduction of capital or guaranteed payment. Long story short-guaranteed payments do not affect capital accounts.

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