Tim and Janet are equal partners in the TJ Partnership.Partnership income for the year is $20,000.Tim needs cash in order to pay tax on his share of the partnership income,but Janet wants to leave the cash in the partnership for expansion.If the partners agree,it is acceptable for TJ to distribute $5,000 to Tim,and no cash or other property to Janet.

Question

Quizplus · Accepted Answer

As equal partners, Tim and Janet have equal rights to the partnership income. However, they can agree to distribute the income unequally as long as it is done voluntarily and without violating any partnership agreements. In this case, if Janet agrees to let Tim take $5,000 for tax payment, it is acceptable for the partnership to distribute the funds in that manner.

Tim and Janet Are Equal Partners in the TJ Partnership