what are guaranteed payments to partners 
guaranteed payments to partners are payments meant to compensate a partner for services rendered or use of capital essentially they are the equivalent of a salary for partners or limited liability company llc members these kinds of payments eliminate the risk of a partner making personal contributions of time or property and then never getting compensated if the partnership does not prove to be successful 1the word guaranteed refers to the fact that these kinds of payments known as first priority distributions are made without regard to the partnership s profitability in fact such payments constitute a net loss for the partnership they can create special and unexpected tax implications if they are not handled correctly this can prove complicated especially as the internal revenue service irs and the courts have not agreed at times on what constitutes a guaranteed payment to a partner 1understanding guaranteed payments to partnersguaranteed payments to partners are outlined in section 707 c of the internal revenue code irc which defines such payments as those made by a partnership to an individual partner for services or providing capital and states that they are determined without regard to the income of the partnership 2