PARTNERSHIP K1

Forum|Forum|1 year ago
April 30, 2025
3 replies
88 views

I have an LLC with 3 member managers, and I received 55k of guaranteed payments for services I provided to the LLC. On my K1 I checked some investment is not at risk (I do not have enough basis) in line 1 it shows a loss of -18,500 and box 4-a guaranteed payments of $55k but on box 14 self-employment earnings show $36,500, shouldn't I pay self-employment tax on $55k since the guaranteed payments are subject to self-employment taxes? On my schedule SE it shows $36,500 + $4,200 (schedule C net profit) total $40,700 for self-employment taxes, is this correct? Please advise. Any help will be appreciated.

Mike9241

Level 15

as a member-manager the business loss on line 1 is a loss from self-employment so se-income is the $36,500 in box 14. are you sure you don't have basis. even if your tax basis capital account is negative certain liabilities count towards computing your basis. however at-risk is only for limiting the deduction of net losses which you don't have.

Mike9241

eemr19841Author

Level 2

Hi Thank you for your response. Yes, i do not have basis in the partnership (it is negative). I do see that the loss on the partnership is being limited and not deductible on my taxes instead the loss is being carry forward. So, the guarantee payment of $55k and the loss will actually reduce or offset box 14 net self employment? just want to confirm because I read that guarantee payments are subject to Self Employment tax but i did not know a loss on the partnership can reduce the guarantee payment subject to SE tax.