Question

Entities such as partnerships, LLCs, and S corporations are known as ___-___ entities because their income is reported on the owners' tax returns. Any business expenses or losses from these entities are generally deducted ___ AGI.

Answer 1

Partnerships, LLCs, and S corporations are pass-through entities, with deductions made above the line on owners' tax returns.

Step-by-step explanation:

Entities such as partnerships, LLCs, and S corporations are known as pass-through entities because their income is reported on the owners' tax returns. Any business expenses or losses from these entities are generally deducted above the line, which means they are deducted before adjusted gross income (AGI) is calculated.