Partnership Taxation

Partnership taxation refers to how taxes are handled for businesses structured as partnerships. In this model, the partnership itself doesn't pay income tax. Instead, profits and losses "pass through" to the individual partners, who report their share on their personal tax returns. This means partners are taxed based on their share of the income, regardless of whether they actually received any cash. While this avoids double taxation, it requires careful recording of earnings, losses, and distributions to ensure fair and accurate tax reporting for each partner.