Question

Which of the following are generally flow-through entities? (Check all that apply.)

a Limited liability company
b S corporation
c C corporation
d Limited partnership

Answer 1

Flow-through entities include Limited Liability Companies (LLCs), S corporations, and Limited Partnerships, which pass profits directly to the owners' individual tax returns, avoiding double taxation unlike C corporations.

Step-by-step explanation:

The entities that are generally considered flow-through or pass-through are a Limited Liability Company (LLC), S corporation, and a Limited Partnership. These types of business structures allow profits to pass directly to owners and be reported on their individual income tax returns, thus avoiding the double taxation characteristic of C corporations. A C corporation, on the other hand, is not a flow-through entity as it is taxed at the corporate level and dividends are taxed again at the individual level.