Limited partnership accounting records are often maintained consistent with applicable provisions of the Internal Revenue Code and support the preparation of income-tax basis financial statements. Such financial statements are prepared primarily for the purpose of providing income tax data to the limited partners. However, partnerships that are SEC registrants should comply with Regulation S-X and clearly disclose equity and income data for the general partners on a US GAAP basis.
Limited liability companies often elect to be treated as partnerships for federal tax purposes. ASC 272, Limited Liability Entities, states that in order to be classified as a partnership for federal income tax purposes, an LLC should lack at least two of the four characteristics present in a corporation. As discussed in ASC 272-10-05-6, these characteristics are: (1) limited liability, (2) free transferability of interests, (3) centralized management, and (4) continuity of life.
LLCs that are subject to income taxes are also subject to ASC 740.
Other relevant guidance in this chapter for partnerships and for LLCs that report as partnerships and are SEC registrants includes:
  • SAB Topic 4.E, Receivables from sale of stock (codified in ASC 310-10-S99-2)
  • SAB Topic 4.F, Limited Partnerships (codified in ASC 505-10-S99-5)
  • FRP 405
  • Rule 502(b) of Regulation D
  • SEC FRM 3410.1 - SEC FRM 3410.4
  • S-X Article 8, Financial statements of smaller reporting companies
  • Section 15(d) of the Securities Exchange Act of 1934
LLCs often have many of the characteristics of both corporations and partnerships, and significant judgment may be required to determine the appropriate presentation model (ASC 205 or ASC 272).

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