This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams.

In this episode you will learn:

- Guaranteed payments under §707(c) are fixed payments for services or capital use, determined without regard to partnership income.

- The receiving partner reports guaranteed payments as ordinary income, while the partnership deducts them as a business expense.

- Payments made for services are subject to self-employment tax for the recipient partner.

- A partner must report guaranteed payment income in the same tax year the partnership deducts it, regardless of when the cash is received.

- Guaranteed payments are required even if the partnership has a loss, and the payment can create or increase the partnership's ordinary loss.

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