Analyzing Tax Returns: Partnerships

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.""

Categories: