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Partnership Formation

Partnership Formation. Presented by Rosina Magana Anca Zota Oviedo Darshana Raigaga. Partnership Formation. Definition Types of Partnership Legal Steps Advantages and Disadvantages Tax Implications Conclusion Q &A. Definition of Partnership.

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Partnership Formation

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  1. Partnership Formation Presented by Rosina Magana Anca Zota Oviedo Darshana Raigaga

  2. Partnership Formation • Definition • Types of Partnership • Legal Steps • Advantages and Disadvantages • Tax Implications • Conclusion • Q &A

  3. Definition of Partnership • Partnership is an unincorporated business carried on by two or more individuals or other entities.

  4. Types of Partnerships • General Partnership • Limited Partnership • Limited Liability Partnership LLP • Limited Liability Limited Partnership LLLP • Limited Liability Company LLC

  5. Partnership Agreement • 1. Firm name and the identity of partners • 2. Nature and scope of business • 3. Duration • 4. Capital Contributions • 5. Division of Profits and sharing of losses • 6. Managerial Duties • 7. Provisions for terminations

  6. Extinguishment of Partnership • Dissolution • Winding Up or Liquidation • Termination

  7. Taxation of Partnership Income • Tax reporting but not tax paying • Partners report on Form 1040 • Partnership reports on Form 1065 • Income is taxed at the partner’s tax rate

  8. Advantages of Partnership Formation • Easy to form • Losses allocated among the partners • No double taxation • No recognition of gain or loss on contributions or withdrawals

  9. Disadvantages • Unlimited liability • Profits taxed when earned • Self employment taxes

  10. Tax Implications of Partnership Formation • Recognition of gain, loss or income by the partner under Sec.721(a) • Exceptions to Sec 721(a) • Gain or loss recognized by partnership • Basis of partnership interest

  11. Summary • What is a partnership • Types of partnership • Legal steps for formation of partnership • Advantages/Disadvantages • Tax implications • Conclusion • Q &A

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