A tax treatment under which a business is taxed using Subchapter K laws and regulations. It is a type of pass-through taxation in which the entity itself is not taxed. Instead, all of the entities owners are taxed as income is earned or loss is accrued. This is the default tax treatment of partnerships and multi-member LLCs. Partnership taxation allows for a great deal of flexibility in how partnerships divide their income, and as a result this type of taxation can be very simple or very complex. Partners should be aware that increased complexity comes with increased cost.