The more aggressive option on partnership taxation would loosen the rules that now apply to closely held S corporations. Those companies would no longer face limits on the number of shareholders or the prohibition on foreign ownership.
Lost Flexibility
Partnerships, though, would lose the flexibility to allocate tax benefits to partners except for net ordinary income and loss, net capital income and loss and tax credits. Currently, a partnership can distribute each tax break.
Camp’s draft doesn’t affect publicly traded partnerships such as master limited partnerships and real estate investment trusts.
The National Federation of Independent Business, the International Franchise Association and the National Association of Manufacturers all issued supportive statements.
“The Camp proposal would reduce compliance costs and provide greater certainty to the more than 8 million employees across the country who wake up every day and go to work in the franchise industry and those Americans who aspire to become franchisees,” said Judith Thorman, senior vice president of government relations and public policy for the franchise association. The group’s board of directors includes executives of McDonald’s Corp. and Choice Hotels International Inc.