Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.
A partnership’s income, losses, deductions, and credit are passed through to the partners for Federal tax purposes and taxed directly to them, regardless of when income is distributed. Since the partners have already paid tax on the income when it is earned, a complex system of rules applies to prevent double taxation when the income is later distributed to the partners.
These rules (a) allocate the partnership’s income, losses, deductions, and credit among the partners and (b) adjust basis to reflect each partner’s allocation of those items.
As stated in Taxation of Limited Liability Companies and Partnerships, limited liability companies are taxed as partnerships by default.
Pax World will continue offering a second ETF, the Pax MSCI EAFE ESG Index ETF (EAPS), which seeks to track the performance of the MSCI EAFE ESG Index, which consists of companies operating in developed markets around the world, excluding the U. and Canada, that have superior ESG performance as rated by MSCI ESG Research.