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Jasmine is a partner of the XYZ partnership and she is paid $45,000 for her services....

Jasmine is a partner of the XYZ partnership and she is paid $45,000 for her services. In addition her share of the partnership’s business income is $125,000. Will both types of income be subject to the same types of taxes?

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Answer #1

No, both incomes is not subject to same types of tax because one income is exempt

The income earned by jasmine for providing services to XYZ will be taxable in the heads of jasmine but the share of business income earned by jasmine is exempt in heads of jasmine because on that share the firm has already paid the tax. Thats why it is exempt in the heads of jasmine.so the 45000 is taxable in the heads of jasmine and the amount 125000 is exempt in heads of jasmine as firm has paid the tax on it already.

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