Section 199A and Partnerships

Partnerships that provide for guaranteed payments, i.e. a payment of a set amount to one or more partners not dependent on the profit of the partnership can be missing out on Qualified Business Income Deduction (the 20% deduction available to certain owners of pass through entities on their share of profits from the business) since guaranteed payments are not eligible for the Qualified Business Income Deduction. Priority allocation provisions can often accomplish a similar result and qualify for the Qualified Business Income Deduction.