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Wife and I split LLC 50/50, split weekly profit which varies. Is this guaranteed payments?

My wife and I split our simple LLC 50/50. Each week we take in income(varies) and split it 50/50.

At the beginning and end of the year there is no cash, no capital.

I am assuming I have to place this under guaranteed payments to eliminate looking as if we have capital at the end of the year. Yet, other than a fix amount for guaranteed payments, it appears I can not just place a  percentage in guaranteed payments. So, to get this right, I have to know the LLC profit and then split that into the guaranteed payments. Is this right?

 

Thank You

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Expert Alumni

Wife and I split LLC 50/50, split weekly profit which varies. Is this guaranteed payments?

No, you do not need to report the profit you split as Guaranteed Payments on your tax return.

 

Guaranteed Payments are payments made to the partners for their services to the partnership, without regard to the income of the partnership. 

 

To show that the income was distributed to the partners, you can put the amount you took as distributions.

 

If you switch to the forms mode, in the upper right hand corner, on the left hand side you will see Form 1065  p4-5.  Click on the form and then on line 18F you can enter the amount you and your wife took in distributions.  This will keep your capital account and cash accounts at $0.

 

@fcarbone

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Expert Alumni

Wife and I split LLC 50/50, split weekly profit which varies. Is this guaranteed payments?

No, you do not need to report the profit you split as Guaranteed Payments on your tax return.

 

Guaranteed Payments are payments made to the partners for their services to the partnership, without regard to the income of the partnership. 

 

To show that the income was distributed to the partners, you can put the amount you took as distributions.

 

If you switch to the forms mode, in the upper right hand corner, on the left hand side you will see Form 1065  p4-5.  Click on the form and then on line 18F you can enter the amount you and your wife took in distributions.  This will keep your capital account and cash accounts at $0.

 

@fcarbone

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post