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Explain the two types of items that pass through to the shareholders of an S-Corp from...

Explain the two types of items that pass through to the shareholders of an S-Corp from the S-Corp. Why is it designed this way?

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Answer #1

Items that pass through to the shareholders of an S-Corp from the S-Corp are Income/losses, credits/deductions.

An S-Corporation is an entity designed in a way that it is known as pass-through entity. It is tax reporting entity and not atax paying one. It passes its income/losses to the shareholders according to their share.

It provides limited liability status to shareholdes and hence it is designed in a manner it provides safety and avoids double taxation also.

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