Increased partnership tax repealed

Public Act 96-835 was signed into law yesterday and took effect the same day. It restores a tax deduction that had been repealed in this spring’s budget bill. The repeal changed tax policy effective for tax years after Dec. 31, 2009 by limiting partnerships’ deduction to “guaranteed payments” instead of “reasonable compensation” for the Personal Property Replacement Tax. That change generally limits the deduction to income partners because equity partners’ income is based on their share of the distributable income of the partnership. It may be found at this link.