502. Tax treatment of partnerships.

Unless otherwise indicated (whether expressly or by implication), a firm1 is not to be regarded for income tax or corporation tax purposes as an entity separate and distinct from the partners2.

If a firm carries on a trade3 and any partner in the firm is chargeable to income tax, the profits or losses of the trade are calculated on the following basis, as the case may require4. For any period of account in which the partner is a UK resident individual, the profits or losses of the trade are calculated as if the firm were a UK resident individual5. For