A family partnership can be used to shift a portion of the income from a capital-intensive manufacturing business to a taxpayer's young children.

Question

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By creating a family partnership, the parents can transfer a portion of the business ownership to their children, on which the children would receive income. Since children typically have lower tax rates than their parents, this strategy can effectively shift a portion of the business income to lower tax brackets. However, it's important to note that this strategy should be implemented carefully, with the advice of a tax professional, to ensure compliance with tax laws and regulations.

A Family Partnership Can Be Used to Shift a Portion