Income taxes to a partnership:
A)Are an obligation of the partnership.
B)Are an obligation to each partner only when cash is received.
C)Are an obligation to each partner based on their share of profits.
D)Are not an obligation to each partner since a partnership does not pay tax.

Question

Quizplus · Accepted Answer

Income taxes on partnership income are the obligation of the partnership as a whole, but each partner is responsible for paying taxes on their share of the partnership income. The tax obligation for each partner is based on their share of the partnership's profits according to the partnership agreement. Therefore, option C is the correct choice. Option A incorrectly implies that the partnership alone is responsible for paying income taxes, whereas option B is incomplete and not entirely accurate. Option D is entirely wrong since partnerships are required to file an informational tax return, and each partner must report their share of partnership income on their individual tax return.

Income Taxes to a Partnership