Asked by Beyza Albayrak on May 14, 2024
Verified
Which of the following apply to an S-type corporation?
A) Double taxation of earnings
B) Taxation similar to a partnership
C) Can be owned by another corporation
D) None of the above
S-type Corporation
A special designation that allows corporations to pass corporate income, credits, and deductions directly to their shareholders for federal tax purposes.
Taxation
The practice by which a government collects money from individuals, businesses, and other organizations to fund public services and initiatives.
Partnership
A business structure where two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Agreement.
- Understand the characteristics and taxation of different business forms, including S corporations and partnerships.
Verified Answer
SA
Shaik AbdulMay 19, 2024
Final Answer :
B
Explanation :
S-type corporations are taxed similarly to partnerships, meaning that the business itself is not taxed, but rather the profits and losses are passed through to the individual shareholders who are then responsible for reporting them on their personal tax returns. S-type corporations also have limitations on who can own stock, as individuals and certain types of trusts are generally the only eligible shareholders.
Learning Objectives
- Understand the characteristics and taxation of different business forms, including S corporations and partnerships.