Partnership and Tax-Exempt Organizations

 

Suppose that you have a new client who would like to form a partnership. The client has asked you to assist in avoiding transactions that might result in a taxable transaction for the partnership.

• Recommend at least two transactions that the partnership should avoid in order to prevent a taxable transaction to the partnership. Explain how your answer would differ if the company was an S-corporation rather than a partnership.
• Provide a rationale for your recommendation.