One of your clients is a dermatologist who is on the staff of a local hospital...

One of your clients is a dermatologist who is on the staff of a local hospital and also a partner in a medical partnership. He receives a K-1 at the end of the year that lists him as a limited partner and includes amounts identified as Guaranteed Payments. You client explains that the amount listed as Guaranteed Payments is his share of the partnership income and does not represent payment for services provided to or on behalf of the partnership. He contends that they should be reported as passive income and therefore not subject to Self-Employment tax.

Accounting Income Taxes

Expert Solution

Partner Taxable Income: Guaranteed payments are also included on Schedule K-1, line 4, as ordinary income to the partner (they may also be included as part of net earnings from self-employment on line 14a). Guaranteed payments for services are not included in qualified business income for purposes of the Section 199A deduction for flow-through business entities.

All partners that are actively participating in a partnership are generally subject to self-employment taxes on their share of ordinary income from the partnership. In addition, they are also subject to self-employment taxes on their share of guaranteed payments. Ordinary business income or loss is reported on Line 1 of each partner’s Schedule K-1, while guaranteed payments are reported on Line 4 of the Schedule K-1.

According to IRC Section 707(c), guaranteed payments to partners are determined without regard to the income of the partnership. Payments to a partner for services or the use of capital should be considered just like it is made to one who is not a member of the partnership. The partnership agreement must outline whether and when the partners are to receive guaranteed payments and how those respective amounts are calculated.

ekkarill92 answered 1 year ago

- At a local hospital, a decision was made to downsize the nursing staff. The local...

- At a local hospital, a decision was made to downsize the nursing staff. The local television station sent a reporter and camera crew to interview the administrator regarding the impact of this action on patient care. After 20 minutes of filming the interview, the reporter left. Later that evening, the CEO received a call from the hospital’s public relations director, who directed her to YouTube. A video had been posted showing several nurses and former patients protesting the hospital’s...

At a local hospital, a decision was made to downsize the nursing staff. The local television...

At a local hospital, a decision was made to downsize the nursing staff. The local television station sent a reporter and camera crew to interview the administrator regarding the impact of this action on patient care. After 20 minutes of filming the interview, the reporter left. Later that evening, the CEO received a call from the hospital’s public relations director, who directed her to YouTube. A video had been posted showing several nurses and former patients protesting the hospital’s decision...

Write an explanation to a new staff member in a local health department, one who did...

Write an explanation to a new staff member in a local health department, one who did not have PHE 502 in her curriculum, of how person-years were obtained for each of the smoking groups. Mention what might be the advantages of using an incidence density versus cumulative incidence in your explanation.

You work in a local authority business advice centre. One of your clients wishes to start...

You work in a local authority business advice centre. One of your clients wishes to start a business in the hospitality industry overseas. Advise your client on which mode of entry into international markets she should use. Justify by telling her the advantages and disadvantages of the proposed mode.

8. In a hospital, 30% of the staff are female, and 50% of the staff walk...

8. In a hospital, 30% of the staff are female, and 50% of the staff walk to hospital. If 20% of the staff is female and walk to hospital, what is the probability that a randomly chosen staff is female or walks to hospital? 9. A card is drawn randomly from a standard deck of cards. What is the probability that the card drawn is a 2 or a Spade? Details and Assumptions: A standard deck of cards consists of...

1-You are a hospital administrator who grants privileges toseveral local doctors. Your liability insurance carrier...

1-You are a hospital administrator who grants privileges to several local doctors. Your liability insurance carrier wants to know what steps you are taking to ensure the competence of those doctors. Provide a list to the insurance company that outlines what you look for in your doctors. Your goal is to be as complete as possible. Why? If you're not, the insurance company will deny the policy, and leave your hospital open to liability. No pressure, but your job is...

As the only informatics nurse at your local community hospital your CNO relies on you to...

As the only informatics nurse at your local community hospital your CNO relies on you to translate major developments in policy and reimbursements that have direct implications for the department and the facility. How could you defend the relationship between standardized terminology and financial reimbursements related to meaningful use?

How do borderline clients try to get attention from the staff?

You are a new tax staff accountant at a local CPA firm. During your first week...

You are a new tax staff accountant at a local CPA firm. During your first week on the job a client, Ms. Macchiato, came into the firm seeking tax advice. In particular, Ms. Macchiato owns a small coffee shop, called the No Doze Café. Ms. Macchiato currently operates the No Doze Café as a sole proprietorship but is considering incorporating the business as an S corporation. Ms. Macchiato works full-time in the business; if she converts the business to an...

Linda Stevens, LPN, works on a medical floor at the local hospital. One of the patients...

Linda Stevens, LPN, works on a medical floor at the local hospital. One of the patients she has been assigned to take care of is Frank Gibbons, a 72-year-old newly diagnosed with diabetes (a condition in which the body does not produce enough insulin to control blood sugar levels). Part of Linda’s process of preparing to care for her patients is to review the patients’ charts for any new physician orders. She notes that Dr. Romero was in the previous...

Question