Which of the Following Statements Is True of Taxation in Partnerships

question 76

Multiple Choice

Which of the following statements is true of taxation in partnerships?

• A)They pay taxes before distributing profits.
• B)They report their share of profits as partnership incomes.
• C)They are exempted from tax.
• D)They pay taxes at the income tax rate for individuals.
• E)They are taxed based on the number of shareholders.

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Definitions:

Title

The legal right to own, use, or dispose of property, goods, or intellectual property.

Risk of Loss

The potential for an asset to be damaged, destroyed, or lost, and the consideration of who bears this responsibility until the asset is delivered.

Insurable Interest

A principle requiring that a person purchasing insurance has a legitimate interest in the continuation of the life, property, or event insured, enough to incur a financial loss if the insured risk occurs.

Shipment Contract

A contract that requires the seller to arrange for the transportation of goods to the buyer, where the risk of loss passes to the buyer upon the seller's delivery to the carrier.