Partners in a partnership pay taxes on all of the profits that a partnership makes. Then the money that has been taxed can either be given to the partners or kept in the business to build the business up and help keep it going.
If it is given to the partners then it is entered as distributions. That reduces each partner's investment in the partnership. If it is kept in the partnership then it increases each partner's investment in the partnership. Either way the partners will pay taxes on the full amount earned by the partnership.
Guaranteed payments are payments that the partnership is contractually required to pay to the partners. If you don't have any of these don't enter them.
You can pay the partners as contract labor if they worked as contractors for the partnership and if they were paid for it. The 1099 income paid to that partner will reduce every partner's share equally. So if there are 4 partners and one of them is paid $2000 on a 1099 it will reduce every partner's share by $500.
Additionally, any partner receiving payments on a 1099 would be required to pay self employment tax on those payments on their personal return.
You are going to report distributions in the partner information section. When you enter the information for each partner there will be a section that asks for information about money contributed by each partner to the partnership and money that was distributed to each partner. Enter the distributions there and they will carry over to the K1s. They will not result in a tax deduction, however.
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