Publicly Traded Partnerships, Tax Cost, and Choice of Entity
Jane R. Livingstone
Western Carolina University
Thomas C. Omer
University of Nebraska at Lincoln - School of Accountancy
July 27, 2009
Tax Notes, p. 365, July 27, 2009
This study considers the characteristics of the publicly traded partnership (PTP) organizational form and operations that likely influenced firms’ decision to retain or abandon the PTP form based on the proposed corporate taxation of these entities passed in 1987 and the subsequent revision in 1997 when the new tax on gross income was known. Considering not only whether a firm retained or abandoned the PTP form but also what alternative is chosen, we study what factors are important to an entity’s decision. Our results suggest that after controlling for potential tax effects, firms that had lower debt levels, higher dividend levels and higher (or less negative) dividend changes were more likely to continue as flow-through entities, even if it meant giving up public trading.
Keywords: publicly traded partnership, taxation, organizational form
JEL Classification: H25Accepted Paper Series
Date posted: July 31, 2009
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