Sham Partnerships and Whether a Partnership Exists

Summary

This practice note discusses sham partnerships and the factors that determine whether a partnership exists. This note first examines the partnership factors and then discusses sham partnerships in detail. To provide a contrast to true partnerships, this practice note also examines other business relationships that resemble partnerships, but ordinarily are not. Whether a partnership exists among the parties to a venture is always a significant issue since the parties in a venture want the flow-through tax advantages that partnerships provide.