Final answer:
In an LLC, profits and losses are reported on individual tax returns, while in an S corporation, taxes are 'passed through' to personal income taxes only.The statement is true.
Step-by-step explanation:
In an LLC, profits and losses are reported on individual tax returns, while in an S corporation, taxes are 'passed through,' meaning that income taken by the owner is reported on personal income taxes only. So the statement is True. In an LLC, the profits or losses are divided among the owners or members based on their ownership percentage, and each owner reports their share on their personal tax return. On the other hand, an S corporation is a pass-through entity, which means that the income or losses of the business are passed through to the shareholders' personal tax returns and taxed at their individual tax rates.