Herman and Henry are equal partners in Badger Enterprises,a calendar year partnership.During the year,Badger Enterprises had $305,000 gross income and $230,000 operating expenses.Badger made no distributions to the partners.Badger must pay tax on $75,000 of income.

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Partnerships like Badger Enterprises are generally not subject to income tax at the entity level; instead, income is passed through to the partners, who report it on their individual tax returns.

Herman and Henry Are Equal Partners in Badger Enterprises,a Calendar