Reported 1 day ago
Partnerships are pass-through entities, meaning they do not pay income tax at the entity level; instead, profits and losses are reported by individual partners on their personal tax returns. This structure requires careful financial planning, as partners must account for income they may not have received in cash, known as 'phantom income.' Filing taxes involves submitting IRS Form 1065 and creating Schedule K-1 for each partner. Proper understanding and management of tax obligations and distributions are crucial for partners to effectively navigate their financial responsibilities.
Source: YAHOO