Is a distributive share of partnership gross income included in gross income?

A distributive share of partnership gross income is included in an individual's gross income because partnerships are pass-through entities for tax purposes. This means that the income, deductions, and credits flow through to the individual partners rather than being taxed at the partnership level. Each partner reports their share of the partnership's income, even if they do not actually receive a cash distribution.

Regardless of whether or not they receive cash or other property from the partnership during the year, partners must include their distributive share of partnership income on their personal tax returns. This process ensures that the tax on the income is ultimately paid by the partners, reflecting their respective shares of the profits or losses of the partnership. The obligation to report this income underscores the rules governing partnership taxation and the recognition of income, ensuring consistency in tax reporting among partners.