Although family limited partnerships are basically a variant (in form more than substance) of the limited partnership,1 and are generally subject to taxation under the Subchapter K of the Internal Revenue Code as partnerships,2 family limited partnerships have acquired a reputation stemming from a perception of tax avoidance and tax sheltering as well as hurried and often careless planning and formation rather than a reputation as a business organizational structure driven by genuine business-related motives and careful planning. Accordingly, the level of scrutiny by the Internal Revenue Service has appeared to be elevated simply by their name and nature.
Harl, Neil E.
"Indirect Gifts on Formation of a Family Limited Partnership,"
Agricultural Law Digest: Vol. 19
, Article 1.
Available at: https://lib.dr.iastate.edu/aglawdigest/vol19/iss23/1