WITAXLADY Posted April 7, 2016 Report Share Posted April 7, 2016 2 barbers start a "Mancave", each have babies (no comments!!) so need to add 3rd haircutter. Now they form a LLC and a partnership 3rd partner is 2% of profits, other 2 split rest. Income comes from 30% 30% of first 2 cuts and 40% of 3rd one. rest is take home - as Guaranteed payments? Which have SE tax on now... So the expenses that normally come off of the SE Income are now going to be paid by the partnership and all the GP is SE taxed without any expenses except some misc personal and mileage to buy their own items etc. So are the profits also SE taxed? If so - doesn't make much difference where subtracted,,, Otherwise, the partnership should be mostly all income and the GP should take all the expenses??? Too foggy to work this one through and of course the 2% wants her taxes weeks ago without paying in anything!!! Solutions - legal and otherwise - just kidding!! Thank you, Darlene Quote Link to comment Share on other sites More sharing options...
Lion EA Posted April 7, 2016 Report Share Posted April 7, 2016 Read the partnership agreement. If there is none, have them write down their joint understanding. If partners are active in the business and taxed as a partnership, SE tax. GP would be spelled out in agreement and could include anything that would be paid out even if they had no profits, such as a set $ amount per month or healthcare premiums. 3 Quote Link to comment Share on other sites More sharing options...
WITAXLADY Posted April 7, 2016 Author Report Share Posted April 7, 2016 WRITTEN AGREEMENT? WHERE? WHAT? BUT THANK YOU - I WILL TRY THAT... WHICH BRINGS UP ANOTHER QUESTION WE HAD - i AM FAMILIAR WITH s cORPS.. OOPS SORRY Can a partnership pay for the health ins premiums? and then is it non taxable - Sec 105 available? or not needed then - or just premiums? thx - I promised I would go to bed at midnite!! Quote Link to comment Share on other sites More sharing options...
Lynn EA USTCP in Louisiana Posted April 7, 2016 Report Share Posted April 7, 2016 I include the health care premiums paid by the partnership for the partners benefit in with their guaranteed payments. 7 Quote Link to comment Share on other sites More sharing options...
mcb39 Posted April 7, 2016 Report Share Posted April 7, 2016 Lynn is correct. Also, the GP is SE income as is the percentage of the profit for each active partner. Goes to Schedule E, page 2. Since the Partnership does not pay any taxes; everything has to flow through to the partners in some fashion. (I am not knowledgeable about S Corps, but I have plenty of experience with Partnerships.) 1 Quote Link to comment Share on other sites More sharing options...
WITAXLADY Posted April 7, 2016 Author Report Share Posted April 7, 2016 marilyn - can I call you - what is your phone number - or send to my email please [email protected] thx Quote Link to comment Share on other sites More sharing options...
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