Analyzing Tax Returns: Partnerships
Posted on Jan 7, 2012 9:00am PST
Another common type of business, the "Partnership" has specific
tax implications of its own which may have a bearing on a family law case
in determining income available forchild support and/or
spousal support.
Family Law News sums it up as follows:
"Owners of Partnerships are taxed as self-employed individuals based
on their Partnership ownership percentage. Like an S-Corporation, partners
receive a Schedule K-1 reflecting their pro rata share of the Partnership
net income. However, Partnership income is subject to self-employment
tax whereas S-Corporation income is taxed only as ordinary income. Distributions
on Partnership K-1s are reflected on Line 19 and marked with an 'A.""