Partnership Formation Tax Assignment Help

A partnership formation is quite beneficial for the firms to take several benefits such as tax advantages and relaxation

from personal liabilities of business debts and torts. A firm can use different types of partnership formations such as general partnership (GP), limited partnership (LP) and limited liability partnership (LLP).

If the firm uses any of these formations, they provide income tax advantages. For example, a general partnership does not need to pay income tax, but it has to file the partnership files Form 1065 (Bushman & Yahoo! Contributor Network, 2007). This file is the U.S. partnership return of income that includes all the tax payable incomes and deductions. This tax deduction facility cannot get by a corporation, because it has to pay double tax. At the same time our case study help experts says that, the corporation has to pay tax double time, one for corporate tax and another for income tax. For example, if, a corporation earns $100000 as a sole proprietor and distributes this amount in two parts $40000 as salary and $60000 as profit of the firm, the owner of corporation has to pay corporate tax on $60000 as well as income tax on $40000. In contrast, the partnership formation provides this tax advantages. In the partnership firm, all the partners are responsible for losses and distributed proportionality among them. Each partner must give their statement of sharing partnership income on their personal income tax and paying self-employment tax.

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