A joint venture in the form of a general partnership may be required where the parties to an agreement carry on a business in common with a view to profit and where profits and losses are shared. In this case the individual Members will have unlimited liability for the debts and liabilities of the Partnership and the actions taken by other Members on behalf of the Partnership. Generally, income from a partnership is passed on to the partners. The partners must include this income in their federal adjusted gross income (for individuals) or taxable income (for other taxpayers) however a partnership may still be required to file a tax return.
A contractual joint venture is tax transparent where there is no pooling of profits or losses and no formal registration requirements. Further, there may be limited liability provided the joint venture is not deemed a partnership. Where the relationship amounts to a partnership, two or more persons carrying on a business in common with a view to profit, then general partnership rules would apply to each member.