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) A partnership is exempt from taxes.
D) The partnership is taxed as a separate entity.

Question

Quizplus · Accepted Answer

Partnerships are not taxed as a separate entity. Instead, the income or loss of the partnership flows through to the partners' individual tax returns, and each partner is taxed on their share of the partnership income or loss. This is known as pass-through taxation, and it allows partnerships to avoid double taxation. Therefore, option A and D are incorrect. Option C is also incorrect as partnerships are not exempt from taxes.

With Regard to Taxation of Partnerships, Which of the Following