6.Two doctors enter a general partnership in the practice of medicine. They are quite successful and over the years produce significant income. One of the doctors is involved in some outside business activities. As a result of those activities he suffers some financial losses. Is this doctor able to offset these financial losses from other business enterprises against the income which he receives as the result of his involvement in the partnership?

A.General partnerships are not a person for the purposes of taxation.Consequently, all of the income of a partnership is passed on to the individual partners. Consequently, any other deductible losses which a partner may incur can be deducted from this income.

B.Yes. No matter the form of a business structure, an investor in that structure can always deduct his personal losses from the profits of his share of the business.

C.No. The partnership entity is a person unto itself and is taxed based on its income. The individual doctor would only be able to deduct his other losses from any dividends he received from the partnership.

D.No. Because the doctor is an employee of the partnership, he cannot deduct other business losses from his employment salary as a result of the partnership.