In general, a partnership is described as a legal relationship that exists between two or more people who carry on a joint business with the goal of benefit.(a) Describe the different types of partners and their characteristics. (attached point form answer for this question; kindly assist me to elaborate more on each points)(b) Determine the conditions that must be met for a partnership to exist.(attached point form answer for this question; kindly assist me to elaborate more on each points) Types of partnersCharacteristicsFullContribute capital to the partnership• Are actively engaged in the partnershipbusiness• Share the profits and losses of thepartnership• Income from the partnership is taxedunder section 4(a) Business Income• Do not contribute capital to thepartnership• Draw a salary from the partnershipSalariedbusiness• May or may not received a share of theprofits• Do not share any partnership lossesIncome from the partnership is taxedunder section 4(b) EmploymentIncome.SleepingContribute capital to the partnershipDo not participate in the activities ofthe partnership business.• Receive a share of the profits• Income from the partnership is taxedunder section 4(a) Business Income.• Subscribe to a fixed amount of capitalfor the partnership• Are not actively engaged in theLimitedmanagement of the businessIncome from the partnership is taxedunder section 4(a) Business Income• A company may become a partner of apartnership businessIncome from the partnership is taxedunder section 4(a) Business IncomeCorporate For a partnership to exist, at least one of the main criteria below must be satisfied. Theseare:• Formal agreement between the parties• The partnership is registered with the Registrar of Businesses/Corporations• The partnership is registered with an appropriate professional body• The partnership maintains its own bank account and the partners are chequesignatories• The partnership names are shown on the organisation's business stationery, its tradepremises and in trade directories• There is agreement on the basis of sharing the profits and losses of the partnershipThere is agreement on the basis of contributing capital to the partnership

A partnership is regarded as the agreement that is made by two or more people with an intention to…

Answered: In general, a partnership is described…

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter10: Partnership Taxation

Section: Chapter Questions

Problem 23MCQ

See similar textbooks

Related questions

Question

In general, a partnership is described as a legal relationship that exists between two or more people who carry on a joint business with the goal of benefit.

(a) Describe the different types of partners and their characteristics. (attached point form answer for this question; kindly assist me to elaborate more on each points)

(b) Determine the conditions that must be met for a partnership to exist.(attached point form answer for this question; kindly assist me to elaborate more on each points)

For a partnership to exist, at least one of the main criteria below must be satisfied. These
are:
• Formal agreement between the parties
• The partnership is registered with the Registrar of Businesses/Corporations
• The partnership is registered with an appropriate professional body
• The partnership maintains its own bank account and the partners are cheque
signatories
• The partnership names are shown on the organisation's business stationery, its trade
premises and in trade directories
• There is agreement on the basis of sharing the profits and losses of the partnership
There is agreement on the basis of contributing capital to the partnership

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.