Which of the following statements regarding partnerships is true?
A)Partnership income is taxed in the partnership.
B)Partnership losses cannot be offset against the partners' other income.
C)Partnership income is included in a partner's income in the year of disbursement.
D)Partnerships may earn business income, property income, and capital gains.

Question

Quizplus · Accepted Answer

Partnerships can earn income in different forms such as business income from operations, property income from rental income, and capital gains from the sale of assets. Partnership income is passed to the partners and is taxed at their individual tax rates, not at the partnership level. The partners can offset their share of partnership losses against other sources of income, subject to certain rules and limitations. The timing of when partnership income is included in a partner's income depends on the partnership agreement and the type of income earned.

Which of the Following Statements Regarding Partnerships Is True