Which of the following statements about the taxation of partnerships is MOST accurate?
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 directly as an entity. Rather, they file tax returns to report their profits and losses, but the profits and losses are passed on to the partners who report them on their own tax returns. This is known as pass-through taxation.

Which of the Following Statements About the Taxation of Partnerships