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