News & Updates:

Like the website?
Recommend Us To a Friend

BUSINESS TAXATION

Partnerships are not entitled to a personal exemption, credits for dependents or the standard deduction given individuals. But partners are allowed all of these in making their own returns.

A partner's proportionate share of the partnership profits or losses is part of his gross income. He reports the income even though, in fact, it has not yet been distributed. The partner reports his partnership income even though he is on a cash basis while the partnership is on an accrual basis, or vice versa.

A partnership's tax year may be different from that of the partner. Then the partner includes in his own tax year his share of the partnership income for the partnership tax year which ends in his tax year. For example, one partner has a tax year ending December 31. The partnership year ends June 30. The partner includes in his December 31 tax return the partnership earnings for the period ending June 30.

It is important to note that certain partnerships may be taxed as if they were corporations. Depending upon the circumstances, this may either be advantageous or disadvantageous, so consult your tax advisor.

Financing. The problems of financing the partnership entity are quite similar to those of the sole proprietorship. (See pages 12 to 17.) Of course, your credit standing is enhanced by the fact that there are more people in the enterprise upon whom creditors can rely.

Related terms include business online and al business huntsville own small woman.