I just recently discovered that Partners can elect to be excluded from Subchapter K, which means that a partnership or LLC can report their share separately after all agree to this election and notify the IRS in the proper way. Thereafter they would take their percentage of income and expense and report it on their Schedule C, E or F.
This reminds me of Joint Venture operations in the Oil and Gas business. The production from a lease or unit may have several working interest owners such as Exxon, BP, Conoco-Phillips and some lesser-known producers. One owner pays the bills, and bills each other owner his share of expenses and charges an agreed fee for administration. Revenue is handled separately since each owner may decide to sell to a different buyer or may let the operator collect and disburse the money. Joint Interest Agreements invariably state that this DOES NOT create a partnership.
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