Guaranteed payments to Partner

[jasdlm]

Partner wants me to amend 1099 filing to issue her a 1099 NEC because her accountant said,

"The commission income from the specific contracts should be reported to me and the IRS as Form-NEC income instead of Guaranteed Payments to Partners. This would allow the partnership to properly deduct this amount to arrive at Net Income instead of the confusion on the Schedule K-1 as currently being reported.”

The 'confusion on the Schedule K-1', which I prepared, is that she could not take QBI against the Guaranteed Payment.  I do not do her return, obviously, but I do the partnership return.

Other than a 1099 for interest, is there some type of service for which I could issue a 1099 NEC to a partner rather than a k1?

Thanks in advance.  These types of things make me question my competence and ability to read.

[Lion EA]

Partners receive Form K-1, not Form 1099-NEC. This one might go on your to-fire list.

[Lee B]

Now that the risk of winning the "Audit Lottery" is so low, both taxpayers and professionals are being seduced with the lure of "Easy Money"

which in their minds justifies all sorts of creative schemes and alternate realities.

Every day in the media, we see hucksters being glorified and getting rich.

It certainly makes the explanation of "how to comply with rules and regulations" seem dull and unimaginative.

It's hard for the satisfaction of being competent and doing a "good job" to compete against the thrill of saving thousands of dollars.

 

 

 

[Gail in Virginia]

10 hours ago, cbslee said:

Now that the risk of winning the "Audit Lottery" is so low, both taxpayers and professionals are being seduced with the lure of "Easy Money"

which in their minds justifies all sorts of creative schemes and alternate realities.

Every day in the media, we see hucksters being glorified and getting rich.

It certainly makes the explanation of "how to comply with rules and regulations" seem dull and unimaginative.

It's hard for the satisfaction of being competent and doing a "good job" to compete against the thrill of saving thousands of dollars.

 

 

 

Plus, with the perception that everyone else is doing such schemes and getting away with it, most taxpayers feel like they are just leveling the playing field and that it is only fair. 

[Slippery Pencil]

On 10/19/2022 at 7:48 PM, jasdlm said:

should be reported to me and the IRS as Form-NEC income instead of Guaranteed Payments

As Lion said, partners receive K1s not 1099s.  The income should be reported on the K1 as the partnership agreement states.  What does the agreement state?  If the agreement states "guaranteed payments of $x" then $x gets reported on the K1 as a guaranteed payment.  They could talk to a lawyer about back dating a partnership agreement to claim a different income distribution percentage and no guaranteed payments, but I'm assuming legally that won't work.

Ignoring the impossibility of this idea, which partner is asking to amend?  Does she have the authority to do this or is she unilaterally ignoring the other partners?

If her accountant is confused by guaranteed payments on a K1, she should get a new accountant.