Ideal Salaries, Guaranteed Payments and a corporate partner

[bdeancpa]

I have a plan that has six partners; 5 individuals and 1 corporation. The tax return is pretty well prepared except for the profit sharing plan deduction. The individual partners all receive guaranteed payments that qualify as SE income. These payments are not in the same ratio as the partners income and loss percentages. I tried putting them in the Outside W-2 Income field in census which did cause Relius to include them in the partners eligible compensation, but it did not include them in the calculation of SE tax. Has anyone else delt with this?

Also, on the HCE/Ownership percent tab in census I can enter a partners income ration and pension cost ration. On this plan I calculated SE income prior to SE tax and retirement contribuiton and then calculated each partners relative share of that SE income. I entered that income in Relius (it did not include the portion of income allocated to the corporate partner and not subject to SE tax). This seemed to work great. Next I entered a pension cost ration that did eaqual each partners profit/loss ration per the partnership agreement. These ratios did not add up to 100% as the corporate partner will be allocated a portion of the rank & file pension costs as well. When processing the plan Relius allocated the entire rank & file penson cost to the 5 individual shareholders. Thus 100% of the rank & file cost were allocated to the 5 individuals even though their pension cost ration did not add up to 100%. Is there any way to get Relius to only allocate the percent of rank & file cost that is enterd in the pension cost ration in census?

[bdeancpa]

Okay, I figured out how to make Relius do my calculations for me and it worked very well. I thought I would post my methodology in case anyone else is interested.

First, I calculated the SE income to be allocated amoung the non-corporate partners. I summed up each partners ordinary income (before rank & file profit sharing deduction) and guaranteed payments and reduced the number by the partners share of sec. 179 depreciation deduction and acquisition interest. The sum of each of the 5 non-corporate partners individual numbers is what I entered in plan specifications in Relius as the estimated gross profit to allocate.

Second, I calculatd the percent of the income number I entered in plan specs that I wanted allocated to each of the non-corporate partners (outside of Relius). I entered this as the partners partnership ratio in census.

Third, I set up the corparate partner as a plan participant (this only works if the partner is set up as an eligible plan participant) and gave the partner a partnership ratio in census of 0.0000001%. Relius allocated $0.01 of income to the corporate partner and the remainder to the individual partners. On the tax return the corporate partner will have substantial income, but this income is not SE income and I did not include it in the estimated gross profit number in plan specs.

Fourth, I gave the corporate partner a pension cost ration in census equal to the partners actual income/loss sharing ration. Relius allocated the deduction for the rank & file pension costs among the six partners in accordance with this ration. So while Relius allocated no income to the corporate partner, it did allocate the corporate partners share of pension cost to the corporation. This results in the correct pension cost allocation to the individual partners, which in turn allows Relius to correctly calculate the 1/2 SE tax deduction and correctly determine the partners contributions.