Two tax planning opportunities to avoid the foreign earned income exclusion limitation include:

1. Specify in the partnership agreement that the partners distributive share is based on the partnerships foreign income (which, if earned, will give rise to foreign earned income).
2. The partnership can pay partners for services performed via guaranteed payments, which, to the degree received for services rendered in a foreign country, will constitute foreign earned income. Guaranteed payments will need to be specified in the partnership agreement.

Which of these two opportunities is preferable, and why?