Which of the following statements is true about taxes in a limited partnership?
A) Limited partners are not double taxed, but general partners are.
B) Both limited partners and general partners pay taxes on their share of the profit.
C) Both limited partners and general partners are double taxed.
D) General partners, but not limited partners, pay taxes for profits of the partnership.
E) Both limited partners and general partners are double taxed, however, the amount of tax liability by limited partners is capped.

Question

Quizplus · Accepted Answer

In a limited partnership, both limited partners and general partners are taxed on their individual share of the profits, not at the partnership level, thus avoiding double taxation. This means that the income flows through to their personal tax returns, where they report their share of the profits and pay taxes accordingly.

Which of the Following Statements Is True About Taxes in a Limited