Publicly Traded Partnerships, Closely Held Corporations, and Entity Classification for Tax Purposes

7 Pages Posted: 28 Jan 2010 Last revised: 27 Jun 2014

George K. Yin

University of Virginia School of Law

Date Written: March 2010

Abstract

This comment, presented as part of a November, 2009, tax program on publicly traded partnerships, argues for the adoption of two classification lines to facilitate the collection of tax attributable to business income. One line would separate public firms from private ones with the former, but not the latter, being made subject to an entity-level tax. This tax, which might be part of an integrated or classical income tax system, could be determined in a manner that takes advantage of the unique characteristics of public firms. The second line would separate private firms based on the tax profiles of their owners. Firms whose owners are all taxed in a comparable fashion could be provided with a somewhat simplified rule structure. All other private firms would be subject to a more rigorous, and possibly less flexible, set of pass through taxation rules. With this division, the IRS could concentrate its limited enforcement resources on the last group of firms, and policymakers could provide legislation focused on resolving the unique tax problems presented by those firms.

Keywords: public firms, private firms, entity classification, publicly traded partnerships, closely held corporations

JEL Classification: H20, H25, H26, K34

Suggested Citation

Yin, George K., Publicly Traded Partnerships, Closely Held Corporations, and Entity Classification for Tax Purposes (March 2010). 88 Taxes 329 (2010); Virginia Public Law and Legal Theory Research Paper No. 2010-05; Virginia Law and Economics Research Paper No. 2010-01. Available at SSRN: https://ssrn.com/abstract=1543349 or http://dx.doi.org/10.2139/ssrn.1543349

George K. Yin (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States
434-924-7025 (Phone)
434-924-7536 (Fax)

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