Final answer:
C corporations have more flexibility in selecting a tax year-end compared to flow-through entities, as they are not as constrained by IRS rules and can choose any month that aligns with their business needs.
Step-by-step explanation:
When considering flexibility in selecting a tax year-end, C corporations generally have more options compared to flow-through entities like S corporations and entities taxed as partnerships.
C corporations can choose any month as their year-end, whereas S corporations, partnerships, and other flow-through entities are generally required to use December 31 as their tax year-end unless they can establish a business purpose for a different year-end, or meet certain specific exceptions set by the Internal Revenue Service (IRS).
For instance, flow-through entities may choose an alternative year-end if they can prove a natural business year or if they are part of a qualified group of entities that share a common tax year. However, these exceptions do not provide as much flexibility as C corporations, which are not subject to the same rules and can select a tax year-end that best fits their financial or business needs.
Therefore, the answer to the question of whether C corporations or flow-through entities are more flexible in terms of selecting a tax year-end is Option 1: C Corporations.