General Partnerships

No Federal tax is imposed on the business entity. Income and expenses are allocated among partners, and each pays tax of 10% to 37% (plus self-employment tax, if applicable) on their share of partnership profits, whether distributed or not. Losses pass through to partners. Restrictions on loss deductibility apply.*

Personal liability rests with each partner.

* Owners of business entities, which are not taxed as ā€œCā€ corporations, are eligible for a 20% Qualified Business Income (QBI) deduction. The deduction for QBI may be limited and/or subject to phase-out, depending on the taxable income of the individual, as well as such factors as the type of business, amount of wages paid by the business, and amount of capital assets owned by the business. For income above $326,600, the legislation phases in limits on what otherwise would be an effective marginal rate of not more than 29.6%.