a partnership can make unequal distributions to partners. making guaranteed payments makes no sense especially if they're proportional to ownership. that could be a partnership deduction which means that all the partners would get a benefit (page 1 line 10 deduction) while he would be taxed on 100%. by the way that's what partnerships generally do. make distributions to partners to help them pay taxes on the income the partnership earned.
* guaranteed payments serve two purposes - 1) to compensate partners for services when the services performed don't match up with their ownership (example two 50/50partners - profit and loss sharing - but one spends 2000 hours performing services while the other spends only 500) or a return on invested capital. guaranteed payments for services are subject to self-employment tax
* Another example: 2 equal partners in a non-passive activity each performing the same hours of service. before GPs the partnership earns $100K. each partner gets a GP of $25K. thus the partnership now has $50K net income split 50/50. so each partner reports as income $25K of partnership income and $25K of GP. the result each reports $50K of income. the same result if the GPs were treated as distributions which are non- taxable in this situation - each partner reports $50K of partnership income.
