Business
Guaranteed payment
A payment a partnership makes to a partner for services or capital, regardless of whether it made a profit.
It is the closest thing a partnership has to paying a partner a salary, but it is not wages: there is no withholding and no W-2.
The partnership deducts it, and the partner reports it on their K-1 in addition to their share of remaining profit.
It is generally subject to self-employment tax in the hands of the partner who receives it.
Related
Terms that come up beside this one
Partnership
A business with more than one owner that files its own information return and passes profit through to the partners.
Schedule K-1
The statement a partnership or S-corporation issues to each owner reporting their share of its income, deductions and credits.
Material participation
Whether an owner is genuinely involved in running a business, which decides how their share is taxed.