Chapter 3 Mixed Partnerships

Question 1

3.1 Introduction

Answer 1

Partnerships that consist of individuals and companies are mixed partnerships.

Question 2

3.2 Tax consequences of a corporate partnership

Answer 2

Two separate computations of the profit or loss are required per accounting period. The taxable profit calculated using income tax rules is used to allocate the profit shares for the partners who are individuals. Each partner then uses normal current year rules to allocate their share of this profit.
The taxable profit is then recalculated using corporation tax rules, the profit is then used to allocate the relevant profit to the corporate partners (often included as members of a limited liability partnership) for that accounting period. If the accounting period of the partnership does not coincide with the corporate partners own accounting period, the company’s share of the profits will be time apportioned.