Identify which of the following statements is true.
A)Formation of a partnership requires legal documentation.
B)An individual engaged in the active conduct of a business must elect not to be taxed as a partnership.
C)A partnership exists as long as there are at least two individuals or entities engaged in the active conduct of a trade or business or a financial operation, and the business is not a trust or a corporation.
D)All of the above are false.

Question

Quizplus · Accepted Answer

A partnership can be formed without legal documentation as it primarily requires two or more parties to engage in business with the intent to share profits and losses. There's no requirement for an individual to elect not to be taxed as a partnership; rather, default tax classifications apply unless a specific election is made to change the classification. Thus, statement C is true as it correctly describes the basic criteria for a partnership's existence.

Identify Which of the Following Statements Is True