Business & farm

You say "salary" but partnerships don't pay salaries to partners, they make "Guaranteed Payments" which are ordinary income to you and generally subject to Self Employment taxes.  However, payments to you that affect only your capital account with the partnership are typically treated as "draws" - a "return of capital" concept - and would not be taxable until your basis is zeroed out.  Partnership law being what it is the reality is that the above two sentences are gross generalizations that aren't always true.  And, I can't see anyway the claim of rights angle comes into play here.

 

If the payments made to you were legally guaranteed payments for services performed, (I think that has to be part of the partnership agreement to stand up). then your past reporting makes sense, but the partnership's reporting doesn't.  This could be a situation where the partnership has to amend its prior income tax returns, (if "in the past" does refer to prior years), meaning all the partners would also need to amend.

 

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