The amount that each partner withdraws from a partnership
A) cannot exceed the net income reported by the partnership.
B) should be specified in the partnership agreement.
C) is the base on which federal income taxes are levied on the partnership income.
D) is usually determined by the amount of the net income.

Question

Quizplus · Accepted Answer

The partnership agreement should specify how profits and losses will be allocated among the partners and how much each partner may withdraw from the partnership. While the amount withdrawn may be based on the net income, it is not necessarily determined solely by this factor. Ultimately, the agreement should clearly outline the rights and obligations of each partner in terms of financial transactions.

The Amount That Each Partner Withdraws from a Partnership