Question

Guaranteed payments made by a partnership to partners for services rendered to the partnership, that are deductible business expenses under the Internal Revenue Code, are:

1) I only.
2) Both I and II.
3) II only.
4) Neither I nor II.

Answer 1

The guaranteed payments made by a partnership to partners for services rendered to the partnership are deductible business expenses under the Internal Revenue Code.

Step-by-step explanation:

The guaranteed payments made by a partnership to partners for services rendered to the partnership are deductible business expenses under the Internal Revenue Code. These payments are considered compensation for the services provided by the partners to the partnership. They are included as an expense on the partnership's tax return and are deductible from the partnership's taxable income.

For example, if a partnership pays one of its partners a guaranteed payment of $10,000 for services rendered, this payment would be deductible as a business expense on the partnership's tax return.

Therefore, the correct answer to the question is 1) I only.