Question

The limited liability company form of organization:__________.

a) is a poor choice for new businesses.

b) can offer stock incentives to employees.

c) affords less protection from liability than partnerships.

d) avoids the double taxation of C corporations.

Answer 1

Avoids the double taxation of C corporations

Step-by-step explanation:

Double taxation occurs when an organization is made to pay their income taxes two times. This means that the tax is paid both on a personal level and on a corporate level.

This type of taxation puts a strain on the amount of profit that is realised as the corporation is mandated to pay income tax twice after which the remaining amount of profit is distributed to its partners.

Limited liability company do not make such double taxation payment as this type of business is arranged as a flow-through-organisation, this means that the profits comes straight to the shareholders.

This does not mean that they are exempted from tax payment. In a limited liability company taxes are paid only on a personal level.