4 Replies to “Provision of Income Tax in Profit & loss Account for Partnership Firm is compulsory?”

  1. whether it is complusy or not – the Provision means you have added certain amount as expenditure towards IT, so your net profit or loss is near to the actuals… In accounts and auditing never estimate profits – so as much as possible you increase your expenditure in a RIGHT WAY… with necessery supprting bills. so you need not worry about reality and accuracy of loss or profit… If you have not provided the auditor will provide.

  2. In the United States, while GAAP and GAAS would require that income tax be recognized in the financial statements, this would only be required for an entity that is subject to Income Tax. A partnership is a flow-through-entity and, therefore, has no income tax liability. There may be provisions in the partnership agreement that requires the partnership to advance partners money for payment of any income tax as a result of the partnership’s income flow-through. If cash is distributed for this, it would be handled as any partnership distribution.

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