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What Is the Difference Between the Aggregate and Entity Theory

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Essay

What is the difference between the aggregate and entity theory of partnership taxation? Provide two examples of how partnership tax rules reflect the aggregate theory and two examples of how they reflect the entity theory.


Definitions:

Minority Shareholder

An investor who owns less than 50% of a company's shares, typically having limited influence over corporate decisions.

Business Judgment Rule

A principle that shields corporate executives from liability for decisions made in good faith and believed to be in the best interest of the company, even if they are ultimately unsuccessful.

Directors Meeting

A formal gathering of the board of directors of a company to discuss and make decisions on corporate affairs.

Duty of Loyalty

An obligation to act in the best interest of another party, typically within the context of a fiduciary relationship.

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