Official Code of Georgia Annotated

Title 48. REVENUE AND TAXATION · Chapter 7. INCOME TAXES · Article 2. IMPOSITION, RATE, COMPUTATION, EXEMPTIONS, AND CREDITS

48-7-23. Taxation of partnerships.

Active

Current through: Including Acts of the 2025 Regular Session of the General Assembly.

(a)
The net income of a partnership shall be computed in the same manner and on the same basis as in the case of an individual except that the deduction of contributions for charitable purposes allowed by the Internal Revenue Code of 1986 shall not be allowed. Individuals carrying on business in partnership shall be liable for income tax only in their individual capacity; and each partner shall include in his or her individual return his or her distributive shares, whether distributed or not, of the net income of the partnership for the taxable year except as provided in subsection (c) of Code Section 48-7-24. If the taxable year of a partner is different from that of the partnership, the amount included in a partner’s individual return shall be based upon the income of the partnership for the taxable year of the partnership ending with or within the partner’s taxable year.#
(b)
1. (1)
  As used in this subsection, the term “electing partnership” means, with respect to a taxable period, a partnership that has made the election pursuant to paragraph (2) of this subsection with respect to such taxable period.#
2. (2)
  A partnership may annually make an irrevocable election, on its timely filed return under Code Section 48-7-53, to pay the tax levied by this chapter at the entity level for the taxable period covered by such return. Such election must be made on or before the due date for filing the applicable income tax return, including any extensions which have been granted.#
3. (3)
  Notwithstanding subsection (a) of this Code section, an electing partnership with respect to a taxable period shall pay an income tax on its net income at the same rate of the tax imposed on individuals under subsection (a.1) of Code Section 48-7-20 for the corresponding taxable year as computed pursuant to this Code Section, and allocated and apportioned pursuant to Code Section 48-7-31, for such taxable period, and such partners shall not recognize their respective share of the portion of income on which tax was actually paid pursuant to this subsection.#
4. (4)
  No electing partnership nor any of its partners shall be entitled to any credit under Code Section 48-7-28 with respect to such tax so paid or any deduction for such income under subsection (d) of Code Section 48-7-27; provided, however, that such electing partnership shall otherwise be eligible for credits provided by this chapter and shall be considered an “other entity” for purposes of Code Sections 48-7-29.16, 48-7-29.20, and 48-7-29.21.#
5. (5)
  The election under this subsection shall have no impact on the determination of the basis of the partners of an electing partnership in their interests of such electing partnership, except that such partners’ distributive share of the tax paid or accrued by such partnership pursuant to such election shall be taken into account in determining such basis.#
6. (5.1)
  The election under this subsection shall have no impact on the accounting or tax treatment of distributions for an electing pass-through entity.#
7. (6)
  In computing the net income that is subject to taxation, the electing partnership shall not be allowed any deduction for taxes that are based on or measured by gross or net income or any other variant thereof.#

The notes below are printed with the section but are not enacted law (O.C.G.A. § 1-1-1(c)). They are shown apart from the text.

History

Ga. L. 1931, Ex. Sess., p. 24, § 7; Code 1933, § 92-3104; Code 1933, § 91A-3604, enacted by Ga. L. 1978, p. 309, § 2; Ga. L. 1987, p. 191, § 2; Ga. L. 1997, p. 450, § 1; Ga. L. 2021, p. 277, § 2/HB 149; Ga. L. 2022, p. 352, § 48/HB 1428; Ga. L. 2023, p. 346, § 1/HB 412, effective July 1, 2023; Ga. L. 2024, p. 15, § 2/HB 1023, effective July 1, 2024.

Amendments

The 2022 amendment, effective May 2, 2022, part of an Act to revise, modernize, and correct the Code, substituted “this Code section,” for “this Code Section,” in paragraph (b)(3), substituted “however, that such” for “however, such” in paragraph (b)(4), and revised punctuation in paragraph (b)(7). The 2023 amendment, effective July 1, 2023, added paragraph (b)(5.1), and deleted paragraph (b)(7), which read: “This subsection shall only apply to a partnership that is 100 percent directly owned and controlled by persons eligible to be shareholders of an ‘S’ corporation under Section 1361 of the Internal Revenue Code of 1986, as amended.” See Editor’s notes for applicability. The 2024 amendment, effective July 1, 2024, in paragraph (b)(3), substituted “tax on its” for “tax equivalent to 5.75 percent of its”, inserted “at the same rate of the tax imposed on individuals under subsection (a.1) of Code Section 48-7-20 for the corresponding taxable year”, and substituted “this Code Section” for “Code Section 48-7-23”. See Editor’s notes for applicability.

Editor's notes

Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, provides that this Act is applicable to taxable years ending on or after March 11, 1987, and that a taxpayer with a taxable year ending on or after January 1, 1987, and before March 11, 1987, may elect to have the provisions of that Act apply. Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that tax, penalty, and interest liabilities and refund eligibility for prior taxable years shall not be affected by that Act. Ga. L. 1987, p. 191, § 10, not codified by the General Assembly, also provided that provisions of the federal Tax Reform Act of 1986 and of the Internal Revenue Code of 1986 which as of January 1, 1987, were not yet effective become effective for purposes of Georgia taxation on the same dates as they become effective for federal purposes. Ga. L. 2021, p. 277, § 7/HB 149, not codified by the General Assembly, provides, in part, that: “This Act shall be applicable to all taxable years beginning on or after January 1, 2022.” Ga. L. 2023, p. 346, § 2/HB 412, not codified by the General Assembly, provides, in part, that the Act shall be applicable to all taxable years beginning on or after January 1, 2023. Ga. L. 2024, p. 15, § 4/HB 1023, not codified by the General Assembly, makes paragraph (b)(3) of this Code section applicable to all taxable years beginning on or after January 1, 2024.

Cross references

Partnerships generally, § 14-8-1 et seq.

Administrative rules and regulations

Partnerships, Official Compilation of the Rules and Regulations of the State of Georgia, Rules of Department of Revenue, Income Tax Division, Substantive Regulations, Rule 560-7-3-.08.

Law reviews

For article commenting on the 1997 amendment of this Code section, see 14 Ga. St. U.L. Rev. 271 (1997). For article, “Aggregate-Plus Theory of Partnership Taxation,” see 43 Ga. L. Rev. 717 (2009). For annual survey on state and local taxation, see 3 Mercer L. Rev. 231 (2022).

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Current through: Including Acts of the 2025 Regular Session of the General Assembly.

Text read from t48-ch7-8-(v37)-2024-pdf.pdf, Volume V37, 2024 edition, pages 66 to 68; merge action: carried; file SHA-256 94ae5e1b204a.

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