Guaranteed Payments and Qualified Business Income Deduction
. Laura and Mark are equal partners in the LM Partnership. Laura receives a
$35,000 guaranteed payment in the current year and also withdraws $15,000 of
her partnership capital in cash. Partnership ordinary income is $100,000 after
deducting the guaranteed payments for the current year. Assume that Laura is
single and has salary income from other sources such that her marginal tax rate
is 24%. Also assume that, because she has other income, 20% of qualified
business income will be less than 20% of excess taxable income.
a. What amount must Laura include in her gross income, and
what is her taxable amount and after-tax income for the current year taking
into account the qualified business income deduction?
b. How would your answer change if Laura did not receive the
guaranteed payment?
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