Tag: Partnership Tax

Businesses organized through multiple related entities routinely use promissory notes to move money between them. A parent company may issue a note to a subsidiary to capitalize it or fund operations. Affiliates lend to one another as part of ordinary treasury management. In the partnership context, a partner who wants to demonstrate additional financial commitment—but… Continue reading Contribution of A Note to a Subsidiary: The Zero-Basis Rule

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Self-emploiyment taxes are an additional tax over and above any income tax that may be due. The amount can be significant—these Social Security and Medicare taxes can add up to 15.3% on top of ordinary income tax rates. For smaller businesses, it is often a very large part of the overall tax due. How this… Continue reading Can an Active Limited Partner Avoid Self-Employment Tax?

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One of the nuances that come up in tax planning involves the interplay of state law and federal tax law. This brings in all of the nuances and challenges under state law to federal tax law. For example, one common nuance in business transactions arises when the parties to a business arrangement do not document… Continue reading What is a Partnership: State Law vs. Federal Tax Law

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One of the tax benefits of partnerships is that they are flexible. The parties can agree to differing terms and the values and dollars associated with those terms can be trued-up in subsequent years. The allocation of profit and loss provisions provides an example. Depending on their agreement, the parties can allocate profits and losses… Continue reading Partnerships Have to Maintain Accurate Capital Accounts

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