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      "text": "56 EY Family Office Guide Pathway to successful family and wealth management",
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      "text": "Individuals and trusts pay a top federal income tax rate of 39.6% on ordinary income, including the income from family office operations. Income from a partnership retains its \"character\" as it is reported to the owners.",
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      "text": "Dividends of cash or property paid by the domestic US corporation... are generally taxed to the shareholder at a maximum individual income tax rate of 20%... The corporation receives no deduction for its dividend distributions.",
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      "text": "The distribution of cash (or property) from a partnership to the partners generally does not result in the recognition of income (although there are many exceptions to this general rule), so long as the partner has sufficient \"basis\" in the investment.",
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      "text": "Corporations, other than S corporations (described below), are generally subject to US income tax at the entity level on their worldwide income, with a credit allowable for certain taxes paid to foreign jurisdictions.",
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      "text": "Deductions incurred in the course of a trade or business are reported separately from deductions incurred in the production of portfolio income.",
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      "text": "However, the eligibility requirements are very restrictive, especially if the entity is owned by trusts. The complicated rules concerning trust ownership must be analyzed before formation in a family office structure.",
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      "text": "treatment may differ, depending on whether the partner is an individual, trust, or other type of taxpayer and the character of the partner's income and deductions.",
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      "text": "Certain corporations may elect to be taxed under subchapter S of the Internal Revenue Code as a hybrid entity, called an S corporation, or S corp, which allows for many (but not all) of the benefits of the flow-through nature of partnerships.",
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