cancel
Showing results for 
Search instead for 
Did you mean: 
scorpio0679
Level 1

Categorizing guaranteed payments received (income)

Our business involves a professional LLC taxed as a partnership where the two partner entities are S-Corps owned by individuals. The LLC pays guaranteed payments to the member S-Corps, based on a formula that accounts for the efforts towards the partnership contributed by the S-Corps through their professionals. Each of the member S-Corps also generates its own professional fee income directly. A management corporation provides back end services to all three of these entities, including bookkeeping.

 

I've reviewed the discussions concerning guaranteed payments on this forum, which were very helpful, and obtained guidance from our tax CPA. I am stuck on one last thing which seems very minor but important nonetheless. In categorizing the guaranteed payments received by the member S-Corps, would these be categorized as "Fee Income" (operating) or "Investment Income" (other income). Or something else?

 

Any advice or recommendation would be appreciated.

Solved
Best answer May 01, 2019

Best Answers
Rustler
Level 15

Categorizing guaranteed payments received (income)

If the parent LLC is paying guaranteed payments to the s-corps, then the payment in an expense in the parent LLC, and income in the s-corp. You can name the s-corp income account what you wish, myself I would use guaranteed payment income.

I would put it under other income since it is not related to that s-corp sales

View solution in original post

1 Comment
Rustler
Level 15

Categorizing guaranteed payments received (income)

If the parent LLC is paying guaranteed payments to the s-corps, then the payment in an expense in the parent LLC, and income in the s-corp. You can name the s-corp income account what you wish, myself I would use guaranteed payment income.

I would put it under other income since it is not related to that s-corp sales

View solution in original post

Need to get in touch?

Contact us
Sign in for the best experience
Ask questions, get answers, and join our large community of QuickBooks users.
Sign In / Sign Up