Liquidating distribution partnership
Through proper drafting, the grantor will not be deemed to be the owner of the trust property for estate tax purposes.
However, the grantor must pay the tax on the S corporation income flowing to the trust.
The legal definition of a partnership is generally stated as "an association of two or more persons to carry on as co-owners a business for profit" (Revised Uniform Partnership Act § 101 ).
Early English mercantile courts recognized a business form known as the societas.
The money or assets the partner withdraws is recorded in the company's accounting record in what is referred to as a drawing or draw account.
Usually, each partner has a separate drawing account to facilitate accurate record keeping.
This type of business often proves more complicated than a sole proprietorship because each partner makes an investment in the business, though not always in monetary form, and has a right to a portion of its profits.
Some partners rarely take draws while others draw large amounts of money and assets.