An increasingly common form of entity used by small and large business alike to conduct operations is the “pass-through” entity. A pass-through entity is not subject to federal income tax and is often not subject to state income taxes. Instead, the income or loss of the entity is passed through to its owners and is reported by the owners on their respective federal and state income tax returns. The income tax savings available to owners of pass-through entities can be significant. The forms of pass-through entities include general partnerships, limited partnerships, limited liability companies and S corporations. There are important differences among each of the entities. Owners need to be made aware of those differences by their advisors.
Besides tax considerations, other considerations such as management structure, transfer restrictions and the rights of minority owners also need to be taken into account.
The members of our Pass-Through Entities Group have a wide range of experience and extensive expertise in dealing with both tax and non-tax issues pertaining to pass-through entities. We can assist clients to assure that the appropriate entity is selected and the operation of the entity meets the needs and objectives of its owners.