I searched the boards for this and found something that might help, but I'm hoping to get some further clarification. Plan document says that compensation is only counted from date of plan entry. No problem there. The problem is for the partners w/ K-1. How do I determine K-1 comp for only 6 months or 3 months of a Plan Year? Another post indicated that a partner (actually I think it was referencing a Sole Prop) has only one payroll period, 1/1-12/31. Does this mean that ALL of the compensation was earned on 12/31 so if the partner entered 7/1 or 10/1 his entire K-1 is entry date comp? Any thoughts are appreciated.

This is an older post, but I had the same question come up. Did anyone respond to this?

Earned income is deemed to have been earned on the last day of the year. This can cause problems for partnerships that exclude comp prior to participation and I encourage my clients with earned income to avoid that design.