I started an online businees one year ago and at that time I don’t have any money so my relative who was willing to support me and give me the start up money about US$10000 for starting and we both agree that if we make profit, I only take either 50% or maximum US$5000 monthly. And the rest of the profit will T/T wire to him in Japan. How can I report this tax, do I need to pay taxes on the money I wire to this partner, can I claim that is an expense. Please help me. I don’t want to be illegal but I also don’t want to pay too much tax.
#1 by tma on July 2nd, 2011
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If you established a partnership, money you send him is not an expense. It’s a partner’s distribution. It will reduce his basis. It is not taxable to him unless his distributions exceed his basis. The money you send him is not taxable to you either. You should be filing partnership tax returns to report your income and expenses.
You need an accountant.