With regard to taxation of partnerships, which of the following statements is true?
A) Profits are taxed twice.
B) Each partner is taxed in the same way as a sole proprietor.
C) Taxes are paid on a partnership's profits, after which each partner pays taxes on his or her share of the profits.
D) A partnership is exempt from taxes.
E) The partnership is taxed as a separate entity.

Question

Quizplus · Accepted Answer

Partnerships are "pass-through" entities for tax purposes, meaning the profits are not taxed at the partnership level. Instead, each partner reports their share of the partnership's profits or losses on their own tax return and pays taxes accordingly, similar to the taxation of a sole proprietor.

With Regard to Taxation of Partnerships, Which of the Following