A partnership is a formal business arrangement between two or more parties to jointly manage a business, and share profits and liabilities. However, how duties are managed, along with how profits and liabilities are shared, can differ between partners. A significant aspect of this concerns material participation.

Depending on the level of involvement in a partnership, a partner can either be considered active, or passive. This distinction can have implications in tax liability, filing, and can even affect the terms of a partnership agreement.
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For a tailored plan to help you manage your taxes depending on your participation status, schedule a Discovery Call with one of our expert CPAs.

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