Posted: December 19th, 2016
partnership (LLP). Income from the partnership will be split equally among the partners. The
partnership will generate fee income primarily from representing clients in bankruptcy and foreclosure
matters. While some attorney friends have suggested that partners’ earnings will be self-employment
income, other attorneys they know from their local bar association meetings claim just the opposite.
After examining relevant authority, explain how you would advise Richard and Associates on this
why not? [Hint: See Reg. §1.704-1(b)(2)(iii)(b) and §1.704-1(b)(5) Example (5).]
reallocate the taxable and tax-exempt interest among the members? [Hint: See Reg. §1.704-
1(b)(5) Example (5)(ii).]
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