Publicly Traded Partnerships, Tax Cost, and Choice of Entity

Posted: 31 Jul 2009

See all articles by Jane R. Livingstone

Jane R. Livingstone

Western Carolina University

Thomas C. Omer

University of Nebraska at Lincoln - School of Accountancy

Date Written: July 27, 2009

Abstract

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: H25

Suggested Citation

Livingstone, Jane R. and Omer, Thomas C., Publicly Traded Partnerships, Tax Cost, and Choice of Entity (July 27, 2009). Tax Notes, p. 365, July 27, 2009, Available at SSRN: https://ssrn.com/abstract=1437672

Jane R. Livingstone (Contact Author)

Western Carolina University ( email )

United States

Thomas C. Omer

University of Nebraska at Lincoln - School of Accountancy ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

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