HR 3903
Tax Fairness Act of 2021
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Bill overview
The Tax Fairness Act of 2021 modifies how income from partnerships is taxed when a taxpayer performs services for the partnership. It requires a portion of the partnership’s income to be treated as ordinary income rather than capital gains, aiming to ensure that service providers receive a fairer share of profits. The bill introduces a ‘recharacterization account’ to track and adjust income based on the partnership’s activities and the taxpayer’s contributions. It also clarifies how gains from the disposition of partnership interests and distributions of partnership property are taxed.
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