In computing the ordinary income of a partnership, a deduction is allowed for
A)net Sec. 1231 losses.
B)bad debts.
C)foreign income taxes paid.
D)charitable contributions.

Question

Quizplus · Accepted Answer

Partnerships can deduct bad debts from their ordinary income. Bad debts are debts that the partnership cannot collect from customers or clients. They must have been included in the partnership's income in a prior year or must be related to the partnership's trade or business. Net Sec. 1231 losses, foreign income taxes paid, and charitable contributions are all deductions that may be allowed for other types of entities, but not for partnerships when computing ordinary income.

In Computing the Ordinary Income of a Partnership, a Deduction