Asked by Ramond Foster on Jun 10, 2024
Verified
Which of the following is true about a partnership?
A) It is not a tax-paying entity for federal income tax purposes.
B) Business losses are deductible based on the limit on a partner's individual tax return.
C) It does not have a life apart from its owners.
D) Partners of a partnership do not assume personal liability for obligations of the business.
Tax-Paying Entity
An individual or organization required by law to pay taxes to a governmental authority.
Federal Income Tax
An annual financial burden placed by the U.S. federal government on the income of different entities including individuals, corporations, and trusts.
Personal Liability
The legal responsibility of an individual to settle debts or legal claims from their own assets.
- Understand the federal income tax aspects relevant to partnerships.
Verified Answer
AL
Andre Loveheart LondonJun 13, 2024
Final Answer :
A
Explanation :
Like the sole proprietorship,the partnership is not a tax-paying entity for federal income tax purposes.All of the income of the partnership is income to its partners and must be reported on the individual partners' federal income tax returns whether or not it is distributed to the partners.
Learning Objectives
- Understand the federal income tax aspects relevant to partnerships.