WHAT IS THE DIFFERENCE BETWEEN ALLOWANCES AND DISTRIBUTIONS?

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In a Partnership taxation, you have to distinguish Allowances and Distributions. Allocations are the amount of profits on which the partners will pay taxes.

Distributions correspond to the amounts actually received by the shareholders in their bank accounts and therefore they have total enjoyment.

This difference is important because even if the company does not distribute money to its partners (because, for example, its liquidity does not allow it), the partners will still pay taxes on the profits of the company in proportion to their shares in the company.

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