The proper distribution of income, dividends and capital gains will vary depending on the way the entity is setup. Tax rates will also vary at the individual and corporate levels.
Sole proprietorships, partnerships & limited liability partnerships
Distributions of income and capital gains/losses will "flow through" to the individual or partners. Schedule C for sole proprietorships and Schedule K-1 for partnerships all treated as self-employment income.
Distributions of income and capital gains/losses will "flow through" to the individual or partners, treated as W-2 income and ordinary income.
Distributions of interest, dividends and capital gains/losses will be distributed to the shareholders per the authorization of the board of directors. Submitted via Form 1099INT, 1099DIV and 1099B.
Limited liability companies
These can be set up as sole proprietorships, partnerships, S-corporations and C-corporations; as such they will follow the same distribution rules as each of those corresponding entities.
Entrepreneurship & Small BusinessA sole proprietorship is an unincorporated business that has one owner who pays the taxes on the profits of that business.
Personal FinanceBusiness partners need the information on this form to complete their own tax returns. Here are the details.
Personal FinanceSchedule K-1 is a U.S. tax document used to report income, losses and dividends.
MarketsA partnership is an organization where two or more owners operate a business.
InvestingLimited partnerships and master limited partnerships have one difference that makes all the difference.
ETFs & Mutual FundsLearn about the basics of income tax on mutual funds, including what types of income may be subject to the capital gains tax rate.
Entrepreneurship & Small BusinessLearn the differences between the types of business organizations so you can determine how to best structure your business for tax and liability limitations.
RetirementLearn how dividends are taxed by the IRS, and understand the different types of dividend income as well as the capital gains tax rates.
InvestingLLPs are a flexible legal and tax entity that allows partners to benefit from economies of scale by working together while also reducing their liability for the actions of other partners.
ETFs & Mutual FundsPrivate equity and hedge funds offer an appealing tax structure for those who can afford to invest in them. Here's why.