K-1 income from another partnership

[Pat Crum]

The client is a small medical practice.  It's an LLC taxed as a partnership.  The partners have entered into an arrangement with a large medical group which is also an LLC taxed as a partnership.  For 2018 each partner received guaranteed payments from the large medical group.  The guaranteed payments equal the amount of self-employment earnings in box 14 of the large group K-1s.    Can those earnings be treated as part of each partner's compensation for the small medical practice's money purchase plan?  (The large plan has it's own plan that the small practice will be affiliated with in 2020.)

 

[Luke Bailey]

I can't really comment on specific facts, but I will point out that IRC sec. 401(d) means what it says. I am unaware of any guidance or case that allows circumvention of requirement. Again, don't really know your facts.