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- Jul 6, 2016
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I prepare the taxes for a partnership. One of the members has sweat equity in the business, and no monetary basis. Last year they had a loss while they were building out their location, and this year they'll have zero or maybe even negative earnings, as they started earning income mid year, but will have a large depreciation write off from the buildout.
He was paid $18k for part of his shares, and I wonder how to account for it. He also has a guaranteed payment, which I know is subject to self employment taxes, but will the $18k be as well, or is there a way to record it as other income? What factors do I need to consider and be aware of here?
He was paid $18k for part of his shares, and I wonder how to account for it. He also has a guaranteed payment, which I know is subject to self employment taxes, but will the $18k be as well, or is there a way to record it as other income? What factors do I need to consider and be aware of here?