MANAGEMENT

Detailed explanation-1: -A partnership is not a taxable entity under federal law. This means that there is no separate partnership income tax, as there is a corporate income tax.

Detailed explanation-2: -Partnerships, no matter how created or organized, are taxable as corporation for income tax purposes.

Detailed explanation-3: -Nontaxable income won’t be taxed, whether or not you enter it on your tax return. The following items are deemed nontaxable by the IRS: Inheritances, gifts and bequests. Cash rebates on items you purchase from a retailer, manufacturer or dealer.

Detailed explanation-4: -Under Section 26 of the Tax Code, as amended, a general professional partnership as such shall not be subject to income tax. However, persons engaging in business as partners in a general professional partnership shall be liable for income tax only in their separate and individual capacities.

Detailed explanation-5: -Reporting Partnership Income A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it “passes through” profits or losses to its partners.