Using Tax Filings To Prove Status As a Partner

Using Tax Filings To Prove Status As a Partner

      In the blog New York Business Divorce, Franklin C. McRoberts has published The Law Firm “Partner” - Arose By Any Other Name….; HERE IS A LINK to this posting.

      In the absence of a written partnership agreement, disputes may arise as to who is or is not a partner in a particular partnership. As Franklin observes, and in proof of the adage that the cobbler’s children have no shoes, these disputes often arise in law firms that do not have a integrated, written partnership agreement.

       In this posting, Franklin reviews a recent dispute pursuant to which the partnership’s tax filings, which identified a particular individual as being a “general partner” and having a “capital account,” were cited as evidence of partner status. The court was not willing to go so far, holding that the other elements of being a state law (as contrasted with tax law) partner were not in evidence.

Ultimately, being a partner for tax status is not conclusive that one is a partner for purposes of state law.