Accounting transaction for liquidating partnership

Posted by / 04-Jul-2016 12:50

Accounting transaction for liquidating partnership

This determination generally is made at the time of receipt of the partnership interest.

Capital account of each partner represents his equity in the partnership.

Management fees, salary and interest allowances are guaranteed payments.

A partnership treats guaranteed payments for services, or for the use of capital, as if they were made to a person who is not a partner.They are also listed on IRS Schedules K and K-1 of the partnership return.The individual partner reports guaranteed payments on Schedule E (Form 1040) as ordinary income, along with his distributive share of the partnership's other ordinary income.Guaranteed payments are not subject to income tax withholding.In the United States a partnership generally deducts guaranteed payments on line 10 of IRS Form 1065 as business expenses.

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Compensation for services is provided in the form of salary allowance.