In Part I of this two-part series, we discussed the popularity of joint ventures in the construction industry and how construction companies can determine when a joint venture they are part of rises to the level of a partnership. These construction joint ventures were compared to the Saturday morning cartoon series “Justice League.” Why? Because within the Justice League superheroes such as Superman, Batman, and Wonder Woman would come together to address a common purpose. Contractors come together in a similar fashion to effectively address projects that might be too complex or risky for any one contractor to address.
The complexities and risks associated with some joint ventures go well beyond the project site. For example, a myriad of complex tax issues often accompany the intentional or unintentional formation of a joint venture that rises to the level of a partnership for tax purposes. In Part II we will discuss what tax issues face a joint venture once it has been determined that a partnership exists for federal income tax purposes. All of the items to be discussed are identified as potential tax issues by the Internal Revenue Service.
Length: 3 pages (PDF 80 kB)