Yes, if this expense was used to reduce the partnership income on the K-1, then it should also enter your payments on your K1. If that did not happen, then you should report the income as self employment income which ends up defeating the reason for the partnership.
- In the partnership return, guaranteed payments fall into two categories: payments for services and payments for use of capital. On the partnership return, a guaranteed payment is an expense and is reported on Form 1065, Page 1, Line 10 and also on Schedule K Line 4, which is then sent to the K1 of each partner.
Otherwise, this should not be listed as an expense and the net profit should include these payments as part of the net profit. A partnership agreement should state information about guaranteed payments especially if the split is not 50-50.
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