Which of the following statements about a partnership is true?
A)A partnership is a taxpaying entity.
B)Partners are taxed on distributions from a partnership.
C)Partners are taxed on their allocable share of income whether it is distributed or not.
D)Partners are considered employees of the partnership.

Question

Quizplus · Accepted Answer

Partners are taxed on their share of the partnership's income, regardless of whether it is distributed or not. The partnership itself does not pay taxes; instead, the profits and losses of the partnership are "passed through" to the partners, who report them on their individual tax returns. Partners are not employees of the partnership, but rather co-owners who share in the profits and losses of the business.

Which of the Following Statements About a Partnership Is True