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T/F Like partnerships, S corporations generally determine their accounting periods and make accounting method elections at the entity level.

1 Answer

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Final answer:

The statement is true, as both partnerships and S corporations make entity-level accounting decisions and are pass-through entities for tax purposes.

Step-by-step explanation:

The statement is true. Both partnerships and S corporations are subject to entity-level decisions regarding their accounting periods and accounting method elections. Like partnerships, S corporations are considered pass-through entities, meaning income is passed through to the shareholders, who then report the income on their personal tax returns. The S corporation itself is not subject to federal income tax, although it may be responsible for state taxes or other specific federal taxes. This structure allows S corporations to avoid the double taxation that C corporations experience. However, unlike sole proprietorships or partnerships, S corporations can have up to 100 shareholders and benefit from limited liability protection.

User Nikhil Kuriakose
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