Question

Which statement is correct about the forms of Businesses?

A)The profits of a C corp are not subjected to corporate income tax.

B)The profits of LLC are subjected to corporate income tax.

C)The profits of LLC are not subjected to personal income tax.

D)The profits of an S corp are not subjected to corporate income tax.

Answer 1

The correct option is option D,

The s corp, is a pass through entity which does not pay Federal taxes at the corporate level but pay individual taxes. The profit or loss of the business is pass through the shareholders who can then report the profit/loss on their personal tax returns.

LLC can be either S corp or C corp,

In a c corp, the profits are subjected to corporate income taxes, and in a S corp the income/losses is personally taxed.S corp is not taxed at corporate level, but only the shareholders are taxed at the individual level.