This paper will explore the various dimensions of taxation as applied to partnerships in the United States. The material in this paper is not intended as a treatise but rather as a brief explanation of the matter only. The major rules dealing with taxation in partnerships are enshrined in the United States Internal Revenue Code under Chapter 1, sub Chapter K. However, the application of K-1 rules is subservient to declarations of partnership under Form 1065 that documents the various transactions of the partnership entity4. The aim of the method is to ensure that the declarations of income and transaction presented by the entity in question are verifiable against the partners’ declarations. Individually, the partners are provided with K-1 schedules that they need to fill out on their own to report their personal income levels. However, this is far easier said than done since the partners may be involved in more than one entity and it may not be simple to segregate incomes from various entities among other problems. The first step in calculating applicable taxes is to measure the income attributable to the overall partnership5 and then for this income to be segregated as per the various partners. The share of each partner in the entity’s income or loss is determined in accordance with the partnership agreement6. Once a partnership agreement has been drafted, the independent character of the partners is considered as overruled such as in Bellis v. United States7. In case that the partnership agreement fails to provide for a distribution, then the partner’s share is determined by the partner’s partnership interest in the entity8. Additionally, partnership interest for any partner may be calculated using capital accounts of the respective partner9. When dealing with partnership income measurement, certain income sources need to be treated separately in order to arrive at individual partner income. Exclusions from collective income may occur in areas such as charitable contributions, foreign tax payments etc. which in general are personal concerns of the involved partners. In contrast, if charitable spending is done from the platform of the partnership using individual contributions of partners, the spending is not considered to be deductible from taxation. The recent decision on Dunlap et al. v. Commissioner10 makes it clear that any charitable donations from a partnership platform, even if executed by individual partners, must be considered an act of the partnership. However, foreign income derived from partnerships such as through controlled foreign corporations is still subject to tax such as explained in Brown Group Inc. v. Commissioner11. The basic contention is to separate partner income from partnership income. Although a list of items is available that may be subject to exclusion but guidelines remain unclear and open to differing interpretations. This in turn tends to complicate the separation of income items to be used for income measurement. It may not always be possible to separate such sources of income and loss as expounded in the recent decision of Whitehouse Hotel Limited Partnership v. Commissioner12 where the partnership was unable to classify its income sources properly under law. Another aspect is items that are not liable to deductions as long as they
[ your name ] [ ] [ / number ] [Publish Date] Tax Aspects of Partnerships Taxation law regarding partnerships in the United States tends to treat partnerships as flow through entities. Consequently, the entity in itself is not liable to tax payments but instead, the owners of the entity are liable to taxation depending on their ownership of the subject entity1 2…
Tax law and accounting under GAAP are facing wide controversy as to their functions to the society nowadays. The ratifications of earlier tax laws have created the modern tax statutes with additional objectives.
23). Since 1940s, the U.S tax code has undergone many modifications to ensure justice to taxpayers as well as to generate revenue for the federal government. Tax credits, along with other instruments such as tax deductions and tax exemptions, was used to protecting various income groups and business enterprises during economic downturn (economic instability).
In order to restore the economy of America, different tax provisions to bring about development, job creation and growth of the economy have been made. Based on my research, the proposal that I believe to be the most viable and financially attractive to America’s economy and to the taxpayersis the temporary tax relief to create jobs.
The Internal Revenue Service (IRS) is the body charged with the administration of estate tax. In the present provisions of IRS, estate tax is taxable at a maximum rate of 35 percent and exempted up to $5,120,000.
This amount is determined quarterly based on national complied data on the costs of carpenter tools. Issue How should Cambro Construction Company treat employee reimbursement for tax purposes? Analysis The tool allowance that Cambro Construction Company reimburses its carpenters covers the cost of the tools.
Complicating matters for prisons, overcrowding adds a new set of risks that can lead to new emergencies or exacerbate existing emergencies. This is particularly so because the ratio of prison staff to prisoners is entirely unsafe and
three issues: first, the house was destroyed in taxable year 2009; second, the house was destroyed by a natural disaster: third, the insurance company doe not cover for damages or destruction caused by natural disaster.
Section 165(a) provides that, in computing taxable income
rease of taxes on the wealthiest, through raising the rates on the capital gains together with dividends for rich, Romney plans to decrease all tax rates. Moreover, Obama seeks to reform the corporate tax code, but on the other hand Romney claims that he will slash the corporate
According to the author, the levying of carbon tax is considered to be necessary, because it would help to price the fuels equitably and would solve the problem of the excessive combustion of fuels that produce carbon emissions. The imposition of carbon tax is expected to solve the problems related to the use of energy resources.
8 pages (2000 words)Research Paper
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