IRS Publication 541 — Partnerships
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“Organizations Classified as Partnerships An unincorporated organization with two or more members is generally classified as a partnership for federal tax purposes if its members carry on a trade, business, financial operation, or venture and divide its profits.”
The following sections contain general information about partnerships.
Organizations Classified as Partnerships
An unincorporated organization with two or more members is generally classified as a partnership for federal tax purposes if its members carry on a trade, business, financial operation, or venture and divide its profits. However, a joint undertaking merely to share expenses is not a partnership. For example, co -ownership of property maintained and rented or leased is not a partnership unless the co-owners provide services to the tenants. The rules you must use to determine whether an organization is classified as a partnership changed for organizations formed after 1996. Organizations formed after 1996. An organization formed after 1996 is classified as a partnership for federal tax purposes if it has two or more members and it is none of the following.
• An organization formed under a federal or state law that refers to it as incorporated or as a corporation, body corporate, or body politic.
• An organization formed under a state law that refers to it as a joint-stock company or joint-stock association.
• An insurance company.
• Certain banks. 334 505 515 537 538 544 551 925 946 2 Publication 541 (12-2025)
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