Freeman, a single individual, reported the following income in the current year: Guaranteed payment from services rendered to a partnership $50,000…

Choice "c" is correct. Guaranteed payments are reasonable compensation paid to a partner for

services rendered (or use of capital) without regard to his ratio of income. Earned compensation is

subject to selfemployment tax. Payments not guaranteed are merely another way to distribute

partnership profits. The ordinary income reported from an S corporation are taxable income to the

individual or their own individual tax return but is not subject to self-employment tax. The ordinary

income reported from a partnership may be subject to self-employment tax (if to a general partner).