Marty, Nathan, and Oliver form MNO Mechanics, LLC. They make no elections so the LLC will default to a partnership. They agree that Oliver will operate the business and receive a guaranteed payment of $50,000. Oliver's share of the income this year is $20,000. How is the guaranteed payment treated by the partnership and the partners?

The partnership would deduct the $50,000 but only Marty and Nathan's share of income is adjusted for the payment to Oliver.

The partnership would deduct the $50,000. Marty, Nathan, and Oliver's share of income would each be adjusted proportionally by the guaranteed payment.

The partnership would deduct the $50,000 and Oliver's share of income would be adjusted for the guaranteed payment.

The partnership would not be able to deduct the guaranteed payment if the partnership does not have enough income.

Answer rating: 100% (QA)

B The partnership would deduct the 50000 Marty Nathan and Olivers share of income would each be adju... View the full answer