Partnership Tax

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Partnership Tax

Partnerships are easy to form. A quick agreement can be jotted down between 2 friends for their new venture. Partnerships must file an annual income tax return that reports the income and expenses of the partnership on a partner-level basis. Partnerships have many features that can make them complicated and valuable for rewarding efforts of individual partners.

Partnerships are a great tool for family real estate ownership. The partnership provides a discounted valuation for estate and gift tax purposes. It also provides a means of transferring ownership between family members with minimal effort. Our favorite feature is that rental activities are reported by the partnership instead of on an individual tax return. This reduces audit risk on an individual level.

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