Aggregate theory of partnership is a theory which states that a partnership does not have a separate legal existence such as a corporation. Under the aggregate theory of partnership, partnership is only the totality of the partners who make it up. According to this theory, each partner is treated as the owner of a direct and undivided interest in partnership assets, liabilities and operations and is not viewed as a taxpaying entity. Tax is actually paid at the partner level. Partners are treated as a group of individual sole proprietorships for the purpose of tax rules that provide separate elections or limitations, such as IRC section 108 cancellations of debt (COD) income exclusions, itemized deductions, and tax preferences. All partners, under this theory, individually report their respective shares of income and deductions.