In a partnership, what typically happens to profits and losses?

In a partnership, profits and losses are typically divided according to the partnership agreement. This agreement outlines how earnings and expenses are allocated among the partners, which can vary based on a variety of factors such as each partner's contribution, the nature of the partnership, and the specific terms laid out in the partnership agreement itself. This flexibility allows partners to define their respective shares in a way that reflects their understood roles and contributions to the business, making it a key aspect of partnership dynamics.

Partnership agreements can set specific percentages for profit and loss sharing, or they can determine allocation based on different criteria, which is why option B emphasizes the importance of the partnership agreement in dictating these financial outcomes. Understanding this is crucial for partners as it affects their financial stake in the business and impacts their tax obligations.

The other options do not accurately represent how profits and losses are handled in a partnership. Sole sharing with a managing partner, exclusive ownership by a founder partner, or disregard for tax implications do not align with the typical operational structures and legal frameworks governing partnerships.