ExpertHard1 markMultiple Choice
CPA · Question 54 · Area II: Business Law
Which of the following business entities provides limited liability to ALL its owners and allows for 'pass-through' taxation?
Which of the following business entities provides limited liability to ALL its owners and allows for 'pass-through' taxation?
Answer options:
A.
C Corporation
B.
General Partnership
C.
Limited Partnership
D.
S Corporation
How to approach this question
Limited Partnership = At least one General Partner liable. S Corp/LLC = Everyone protected.
Full Answer
D.S Corporation✓ Correct
An S Corporation provides limited liability protection to all shareholders (like a C Corp) but is taxed as a pass-through entity (like a partnership). A Limited Partnership must have at least one general partner with unlimited liability.
Common mistakes
Thinking Limited Partnerships protect all partners.
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