Debra Wanted to Form a Partnership with Lawrence

question 38

Multiple Choice

Debra wanted to form a partnership with Lawrence.He agreed and they became co-owners in an equal partnership.This year,after expenses,the partnership had a profit of $200,000.How will the taxation of this profit be handled?

• A)Since the partnership was Debra's idea,she will pay income tax on the profit on her personal tax return.
• B)The business will pay half of the tax liability,and Debra and Lawrence will pay the other half.
• C)Debra and Lawrence must both pay tax on the business's profit.
• D)The business itself will pay the taxes on the business's profit.

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Definitions:

Simon Fraser University

A public research university located in British Columbia, Canada, known for its comprehensive academic and research programs.

Method of Acceptance

The ways in which an offeree can accept an offer in contract law, such as by performance, promise, or as otherwise stipulated in the offer.

Smoked Salmon

Smoked Salmon is a preparation of salmon, typically cured and then smoked, either hot or cold, used as a delicacy in various cuisines.

Letter of Acceptance

A formal document issued to acknowledge agreement to the terms of a contract, often marking the commencement of the contractual obligations.