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What is the income distribution to partners when income is less than amounts specified in contract?

Phyllis Rotunno's Profile

She gets salary of 20K He gets 10% of 300,000 or 30K. Balance remaining at 2:1 ratio Year 1 Net Income 15,000

Answers

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

Phyllis,

This seems to largely depend on what the contracts all say, including the partnership agreement. If it is truly a partnership, and you've got guarantees that exceed disburseable income, that seems to be a significant mistake.
It *sounds* like you've got guaranteed commitments to pay a total of $50K. Normally, in a partnership or similar structure, you split up the excess, not have guaranteed payments.

That all being said, you follow the letter of the contract.

Cheers

KP

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