alter ego theory. TRUE FALSE Multiple Choice: her nephew Dru to manage her busin

Question

alter ego theory. TRUE FALSE Multiple Choice: her nephew Dru to manage her business, Door's Doors. In addition based 21. Doreen hires to his salary, Doreen provides Dru with health insurance, a 401K, and a bonus on a formula for sharing the profits. Dru is a. a partner because he shares in the profits. b. not a partner because he does not share in the losses c. not a partner because he is family and nepotism is against the law. d a partner because he is family and with a good lawyer could convince a jury that Door's Doors is a family business. 22. Debra and Lawrence have an equal partnership. This year, after expenses, the partnership had a profit of $200,000. Debra and Lawrence will each pay taxes on: a. whatever they receive from the partnership. b. $50,000. c. $100,000. d. None of the above. The partnership itself will pay the taxes on the business's profit 3. Pualani and Quentin do business as partners in Rio Vista Builders, a residen

Explanation / Answer

21. Answer is option B

Partners are required to share profit and loss in partnership

22. Answer is option C

IRS does not consider partnerships to be separate from their owners for tax purposes; instead, they are considered “pass-through” tax entities. So partnership income of 200,000 will be equally distributed between both partners equally . Income of each partner will be 100,000.

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