Partner guaranteed payments are reported on each partner's Schedule K-1 (Form 1065) Partner’s Share of Income, Deductions, Credits, etc. Partnerships may deduct payments or credits to a partner for services or for the use of capital if the payments or credits are determined without regard to partnership income and are allocable to a trade or business activity. Also include in guaranteed payments on the partners' Schedule K-1, amounts paid during the tax year for insurance that constitutes medical care for a partner, a partner's spouse, and partner's dependents, or a partner's children under age 27 who are not dependents.
Do not include any payments and credits that should be capitalized. For example, although payments or credits to a partner for services rendered in syndicating a partnership may be guaranteed payments, they are not deductible as guaranteed payments. They are capital expenditures. However, they should be separately reported on Schedule K, Line 4, and on Schedule K-1, Box 4.
Do not include distributive shares of partnership profits.
Report the guaranteed payments to the appropriate partners on Schedule K-1, Box 4.
To enter partners' guaranteed payments within TaxAct® 1065: