Which one of the following statements regarding partnership taxation is incorrect?
A) A partnership is a tax-paying entity for Federal income tax purposes.
B) Partnership income is comprised of ordinary partnership income or loss and separately stated items.
C) A partnership is required to file a return with the IRS.
D) A partner's profit-sharing percentage may differ from the partner's loss-sharing percentage.
E) All of these are correct.

Question

Quizplus · Accepted Answer

A partnership is not considered a tax-paying entity for Federal income tax purposes. Instead, it is a pass-through entity, meaning the income, deductions, gains, losses, etc., are passed through to the partners to report on their individual tax returns.

Which One of the Following Statements Regarding Partnership Taxation Is