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AN LLC IS PREFERRED OVER AN S CORPORATION FOR ALL OF THE FOLLOWING REASONS EXCEPT WHICH...

AN LLC IS PREFERRED OVER AN S CORPORATION FOR ALL OF THE FOLLOWING REASONS EXCEPT WHICH

PASSIVE PER SE RULE FOR LIMITED PARTNERS APPLIES TO LLC MEMBERS

ABILITY TO CLAIM GREATER TAX LOSSES

ABILITY TO RECEIVE GREATER AMOUNTS OF TAX FREE DISTRIBITIONS

SPECIAL ALLOCATIONS OF PROFITS AND LOSSES PERMITTED

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Answer #1

Answer is option C

ABILITY TO RECEIVE GREATER AMOUNTS OF TAX FREE DISTRIBITIONS

In S corporations, the shareholders divide income into two components that is salary and distribution of profits. of these two components, on salary, there is self-employment tax and on distributions, there is no tax. In LLC, everything that is salary and profits is to be reported on Schedule C and is to be submitted with the form 1040 tax return. In this way, the greater amount of tax free distributions is in S Corporations.

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