- Is a co-ownership taxable? Generally no, because the activities of the co-owners are usually limited to the preservation of the property owned in common and collection of the income therefrom.
- What is the tax liability of the co-owners? They shall report in their respective income tax returns their shares of the income of the co-ownership.
- When will a co-ownership be taxable? When the income of the co-ownership is invested by the co-owners in business or other income producing properties, the co-ownership will be taxable as a corporation because the co-owners have constituted themselves into a taxable PH.
Questions to ponder:
|1.||For purposes of income taxation, which of the following is not considered as corporation?|
|a. General professional partnership||c. Unregistered partnership|
|b. Business partnership||d. Joint stock companies|
2. A general professional partnership is exempt from income tax, but is required to file an annual income information return:
A. For statistical purposes.
B. Because the net income of the partnership will be traced into the income tax return of the partners.
C. Because all income earners are required to file income tax returns.
D. None of the above.
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JONATHAN RUIZ CPA, MIB