The total tax burden on entity income is greater for a partner in a partnership (up to 37% for an individual partner) than on a shareholder in a corporation (21% for an individual shareholder), so partnerships are used only in special situations.

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Partnerships offer pass-through taxation, meaning income is taxed once at the individual partner's rate, not at both the entity and individual levels like C corporations. The choice between partnership and corporation depends on various factors, not just tax rates.

The Total Tax Burden on Entity Income Is Greater for a Partner