Question

A popular form of ownership, created in the 1970’s, that the IRS does not recognize, but taxable income from which is reported similarly to a sole proprietorship on a tax return is:

a-Limited Partnership
b-Money Market Mutual Fund
c-Finance Company
d-LLC

Answer 1

The business structure created in the 1970s that the IRS does not recognize as a separate entity but is taxed similarly to a sole proprietorship is the Limited Liability Company (LLC).

Step-by-step explanation:

The popular form of ownership created in the 1970s that the IRS does not recognize as a separate taxable entity, but whose taxable income is reported similarly to a sole proprietorship on a tax return, is a Limited Liability Company (LLC). An LLC is a flexible form of enterprise that blends elements of partnership and corporate structures. The tax advantage of an LLC is that its income is not taxed at the entity level; instead, profits and losses are passed through to its members, who report this information on their personal income tax returns, much like in a sole proprietorship or partnership.

LLCs are attractive to business owners for several reasons including that they are subject to little government regulation and they can raise more capital than a sole proprietorship. Moreover, LLCs offer the benefit of limited liability to its owners, which is not available in a sole proprietorship.