Question

Which one of the following is not reported by the partnership?

a. The partnership’s ordinary income.

b. The partnership’s separately stated income and deductions.

c. The partnership’s tax preference and adjustment items.

d. The partnership’s net operating loss carryforward.

e. All of the above.

Answer 1

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" any profits or losses to its partners. Each partner includes his or her share of the partnership's income or loss on his or her tax return.

A partnership is not a separate tax entity from its owners; instead, it’s what the IRS calls a “pass-through entity.” This means the partnership itself does not pay any income taxes on profits. Business income simply “passes through” the business to the partners, who report their share of profits (or losses) on their individual income tax returns. In addition, each partner must make quarterly estimated tax payments to the IRS each year.

Hence from the above mentioned information the partnership's tax preference and adjustment items are not required to report under partnership because the partnership's doesn't pay the tax seperately business income simply passes to the partners they are liable to pay taxes .

Hence option (c) is not reported by the partnership .