Partnership Tax Planning 

Partnerships and limited liability companies enjoy substantial tax advantages compared to corporations. They avoid the “double-tax” imposed on the income of large or publicly traded C corporations, and they also enjoy much greater flexibility than S corporations. These advantages come at the cost of considerable tax complexity. 

Seemingly simple transactions, which would not require tax planning if done in a corporation or sole proprietorship, can present tax planning opportunities as well as traps for the unwary. Understanding when to consult with a specialist in partnership taxation can be very important.

  • Some frequently asked partnership tax questions include:
  • How should a new or existing partner who performs services as a manager be compensated? 
  • How can self-employment and net investment income taxes be minimized?
  • How should profits interests be structured?
  • What is the best way to take in a new partner, transfer a partnership interest or liquidate a partnership? 
  • What are the consequences of incurring or paying partnership debt or changing the way the partners share in a partnership liability?
  • What should be done in anticipation of a merger or acquisition?
  • Is the partnership agreement structured and drafted properly, from a tax perspective?

RSM can help answer these questions and advise you generally on the tax issues presented by your business plans and strategies.

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