Question

Lloyd is a partner in an ordinary partnership firm in the business of providing tax services. While serving a client on behalf of the partnership, Lloyd's partner Janet intentionally understates the client's taxable income on a federal tax return. When the true income is reported a few years later, the client is required to pay a penalty. The client sues the partnership and its partners. Which of the following is correct?

A. Janet is not liable to the client because she was acting on behalf of the partnership.

B. Lloyd is not liable to the client, unless he authorized Janet to understate the client's income.

C. The partnership is not liable to the client because the intentional tort is outside the scope of business.

D. Janet is not liable to the client because she was acting in the ordinary course of business.

Answer

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