Tim and Darby are equal partners in the TD Partnership. Partnership income for the year is $60,000. Tim needs cash in order to pay tax on his share of the partnership income, but Darby wants to leave the cash in the partnership for expansion. If the partners agree, it is acceptable for TD to distribute $8,000 to Tim, and no cash or other property to Darby.

Question

Quizplus · Accepted Answer

Since Tim needs cash to pay his taxes, it is acceptable for the partnership to distribute $8,000 to him, even if Darby wants to leave the cash in the partnership. As equal partners, they have the right to agree on this distribution.

Tim and Darby Are Equal Partners in the TD Partnership