Taxation of fringe benefits is a topic that has long been a source of confusion for both taxpayers and tax practitioners.
In some situations, partners of an entity are treated strictly as partners. Consequently, this may make them ineligible for tax-free benefits.
In other instances, partners are treated as employees and are eligible to share in the benefit in the same manner as any other employee. Whether or not a partner is treated as a partner or as an employee is dependent upon the type of benefit being provided.
