Which of the Following Statements Best Describes the Taxation of Partnerships

question 69

Multiple Choice

Which of the following statements best describes the taxation of partnerships?

• A) Partnerships are limited in taxes depending on number of partners.
• B) Both the partnership and the individuals are taxed for any profits earned.
• C) Partnerships file tax returns but pass profits and losses on to partners who report them on their tax returns.
• D) Partnerships use corporate tax rates in filing returns.

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Definitions:

Death Of A Partner

An event in a partnership business that triggers the need to re-evaluate and possibly restructure the business agreement due to the passing away of one of the partners.

Remaining Cash

The amount of cash a business has available after all expenses and liabilities have been paid.

Partnership Agreement

A legal document that outlines the rights, responsibilities, and profit and loss distribution among partners in a business venture.

Contract Between Partners

A legal agreement that outlines the rights, responsibilities, and share of profits/losses among partners in a partnership.