Identify which of the following statements is true.
A)A partner who performs services for a partnership is usually not considered an employee of the partnership.
B)It may be necessary for the partnership to capitalize a partner's guaranteed payment.
C)Guaranteed payments are ordinary income to the recipient.
D)All of the above are true.

Question

Quizplus · Accepted Answer

A) This statement is true. Partners are not considered employees of the partnership and do not receive a salary. Instead, they receive a share of the partnership's profits based on their ownership percentage. 
B) This statement is true. A guaranteed payment to a partner is a payment made to the partner for services rendered to the partnership. These payments are deductible by the partnership and must be capitalized by the partner. 
C) This statement is true. Guaranteed payments to partners are included in the recipient's ordinary income and are subject to self-employment tax.

Identify Which of the Following Statements Is True