Which of the following statements is not correct?
A)Each general partner has unlimited liability for the debts of a partnership.
B)Any general partner can make valid contracts for a partnership and can otherwise conduct its affairs.
C)Federal income tax is levied on the net income of a partnership and on the earnings of the individual partners when the net income is distributed to them.
D)When a partner dies or is incapacitated, the partnership is dissolved.

Question

Quizplus · Accepted Answer

Partnerships themselves are not subject to federal income tax. Instead, their income is passed through to the individual partners, who then report the income on their personal tax returns. This means that the partnership's net income is taxed only at the individual partners' level, not at the partnership level.

Which of the Following Statements Is Not Correct