The UPA generally opted for the aggregate theory in which individual partners ("an association") comprised the partnership. 14.-The free and personal choice of the contracting parties is so essentially necessary to the constituting of a partnership, that even executors and representatives of deceased partners do not, in their representative capacity, succeed to the state and condition of partners; 2 Ves. Under an aggregate theory, partners are co-owners of the business; the partnership is not a distinct legal entity. This article explains the rulings and discusses proper accounting procedures for the transactions they highlight.
The authors of the initial UPA debated whether in theory a partnership should be treated as an aggregate of individual partners or as a corporate-like entity separate from its partners. As LLCs increase in popularity, CPAs are confronted with complex tax issues, particularly when ownership of the LLC changes.The IRS issued revenue rulings 99-5 and 99-6 to address issues surrounding the conversion of a single-member LLC to a multiple-member LLC and the conversion of a multiple-member LLC to a single owner entity.However, certain types of distributions and any distributions that exceed the partner's basis may result in gains or losses that must be reported for the year in which they occur.To understand the taxation of partnerships and distributions, it is necessary to know the 2 types of tax bases concerning partnerships.Early English mercantile courts recognized a business form known as the societas.