Partnerships
A)are required to prepare annual reports.
B)are required to file income tax returns but do not pay Federal income taxes.
C)are required to file income tax returns and pay Federal income taxes.
D)are not required to file income tax returns or pay Federal income taxes.

Question

Quizplus · Accepted Answer

Partnerships are considered "pass-through" entities for tax purposes, meaning they file an informational income tax return (Form 1065 in the United States), but the income or losses are passed through to the individual partners who then report this on their personal tax returns. The partnership itself does not pay federal income taxes.