Which of the following statements best describes the taxation of partnerships?
A) Partnerships are limited in taxes depending on number of partners.
B) Both the partnership and the individuals are taxed for any profits earned.
C) Partnerships file tax returns but pass profits and losses on to partners who report them on their tax returns.
D) Partnerships use corporate tax rates in filing returns.

Question

Quizplus · Accepted Answer

Partnerships are not taxed as entities like corporations, instead, they must file partnership tax returns which simply reports the profits and losses of the partnership that are then passed through to the individual partners. The partners report this on their individual tax returns and are then taxed on their share of the partnership earnings at their individual tax rates.

Which of the Following Statements Best Describes the Taxation of Partnerships