The concept of otherwise separate parties pooling their resources and working together to share profits has been present as long as business has been conducted. Thus, the idea of a business enterprise that owes its existence not to the state but solely to the arrangements between those involved is not new. In England, certainly, references were made in the 15th century to businesses formed as partnerships but it was not until 1890 that these arrangements were codified by statute. For tax lawyers, the most important feature of the partnership in its traditional sense is its fiscal transparency. Quite simply, for tax purposes it does not exist. Partners contribute to the partnership business, own partnership assets collectively and share profits and losses between themselves in accordance with their own agreement. These profits and losses are taxed at the level of the individual partners.
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