A pair of business partners have a business account and respective personal accounts. One business partner gives the other business partner a monthly stipend contingent on the generation of ideas that may one day produce profit for the business. Expenses and distributions are determined on a monthly basis and transferred into a personal account rather than the business account. Neither partner reports this transfer of funds as income. A tax professional in the local community believes these distributions are taxable income. The tax professional said the deposits could be considered non-taxable distributions only if the deposits came from the business account. The partners could then refer to the monies as shareholder distributions/loans that are not taxable. The business tax statements would need to reflect each distribution/loan from Partner A via the business account in order for tax to be exempt. However, the money is taxable since it is transferred into the personal account of Partner B for the exchange of ideas and investment. Technically, Partner A should be giving Partner B a 1099 at the end of the year to reflect each distribution and Partner B should be reporting this income to the IRS (similar to an advanced royalty). Can you offer your thoughts and professional opinion on this issue?