Joint Ventures: Tax Considerations

Contractors use joint ventures for a variety of reasons, including: Bidding on work they otherwise could not complete (spreading risk), or jobs requiring minority or other special business enterprises; Securing bonding or financing to obtain and perform work; Specialization not within the contractor’s expertise; and Increasing access to local markets and global reach. This article provides an overview of some tax issues facing joint ventures. v Tax Structure According to IRC section 761, a “partnership” includes “… a syndicate, group, pool, joint venture, or other unincorporated organization through or by means of which any business, financial operation, or venture is carried on.” For tax purposes, the typical structure of a joint venture is taxed as a partnership. If a separate entity is established under state law, it is generally considered to be a “pass-through,” similar to a limited liability company (LLC), or a partnership – whether that is a general partnership (GP), a limited partnership (LP), or a limited liability… read more →