Uber is shutting down the alcohol delivery service it acquired for north of $1.1 billion to fold it into the main UberEats app. There were other issues with Drizly, and the company line is that Uber wanted to deliver everything under one brand, but to shutter a $1B acquisition dovetails with a larger market shift that can be constructive to small business owners.

We see it all the time. The end of the year comes along and we get a detailed list of what you’ve paid in wages throughout the year. There, front and center, is a W2 being paid to a partner. Let’s take a closer look at this picture.

Phantom income often arises when using a passthrough entity. Often a problem for LLCs, S Corps, and partnerships, phantom income occurs when the business entity reports a yearly profit, yet the owner or investors in the business do not receive cash reflecting the allocation. The IRS still taxes the full amount of the business’s income, creating tax on unreceived income for business members.

“It’s not a lie, it’s an adjustment. It’s the rule of three….if a guy tells you how many girls he’s hooked up with, it’s not even close to that. You take that number and divide by three, then you get the real total. So if Kevin’s saying it’s been three girls, it’s more like one. Or none!....The Rule of three, it’s an exact science. Consistent as gravity.” – American Pie