These items are then passed through to the partners through their distributive shares." In the absence of an election to the contrary, multi-member limited liability companies (LLCs), limited liability partnerships (LLPs) and certain multi-member trusts are treated as partnerships for United States federal income tax purposes. Individual states of the United States do not universally accord "flow-through" taxation to partnerships, and some distinguish among different kinds of entities that are treated the same under federal tax principles (e.g.
Texas taxes LLCs as corporations, while according flow-through treatment to partnerships).
It is merely a conduit passing income through to the partners for reporting on their individual tax returns.
"The aggregate approach reflects the underlying notion that the partnership form generally should affect the tax treatment of the partners as little as possible.
Thus it is useful to compare the treatment of a similar non-partnership transaction under general income tax principles." Entity Concept An entity concept on the other hand looks at a partnership as a separate entity for tax purposes with partners owning equity interest in the partnership as a whole.