Perry Woodson has a great deal of experience with respiratory therapy. Lewis Mitchell has the business connection

Question:

Perry Woodson has a great deal of experience with respiratory therapy. Lewis Mitchell has the business connection and knowledge. They have decided to start a partnership that sells respiratory equipment, employing several sales representatives. They have decided to share equally in the net income and net losses. After two years, the business is thriving having sold more than 1,000 units this year. One day, Perry receives a call from the Internal Revenue Service (IRS). Unknown to Perry, Lewis has not paid the payroll taxes for last year and is behind on the payroll taxes in the current quarter. Perry learns that Lewis has a gambling problem and there is insufficient money to pay the IRS. Lewis has no personal assets that can be confiscated. What are Perry's options for the resolution of the IRS problem? What is Perry's liability? What actions should Perry have taken prior to the partnership agreement?
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

College Accounting Chapters 1-30

ISBN: 978-0077862398

14th edition

Authors: John Price, M. David Haddock, Michael Farina

Question Posted: