Which of the following is true regarding corporations other than S corporations?

A) A corporation is not a separate legal entity.
B) A corporation may not be sued.
C) A corporation is created according to federal law.
D) Shareholders are typically held liable for the debts of the corporation.
E) The corporation must pay taxes on profits,and shareholders must pay taxes on dividends they receive from the corporation.

S Corporations

Corporations that elect a special tax status to pass income, losses, deductions, and credit through to their shareholders for federal tax purposes.

Separate Legal Entity

A legal structure that is distinct and independent from its owners, allowing it to own assets, incur liabilities, and enter into contracts.

Shareholders

Individuals or entities that own shares in a corporation, giving them ownership stakes and sometimes rights to dividends and to vote on corporate matters.