1. Corporations, limited liability companies (LLCs), general and limited partnerships, and sole proprietorships are the more common legal entities used for operating a business. 2.Corporations and LLCs offer owners limited liability. General partners and sole proprietors may be held personally responsible for the debts of the general partnership and sole proprietorship. However,limited partners are not responsible for the partnership’s liabilities. 3.A business entity may be legally classified as a corporation, limited liability company (LLC), a general partnership (GP), a limited partnership (LP), or a sole proprietorship under state law. However, for tax purposes a business entity can be classified as either a separate taxpaying entity or as a flow-through entity. Separate taxpaying entities pay tax on their own income. In contrast, flow-through entities generally don’t pay taxes because income from these entities flows through to their business owners who are responsible for paying tax on the income. C corporations are separate taxpaying entities and if elected some flow-through entities may be treated as separate taxpaying entities. Flow-through entities are usually taxed as either partnerships, sole proprietorships, or disregarded entities. 4.A taxation principle referring to income taxes that are paid twice on the same source of earned income. Double taxation occurs because corporations are considered separate legal entities from their shareholders. As such, corporations pay taxes on their annual earnings, just as individuals do. When corporations pay out dividends to shareholders, those dividend payments incur income-tax liabilities for the shareholders who receive them, even though the earnings that provided the cash to pay the dividends were already taxed at the corporate level. 5. Double tax is actually more favorable if you, 1. Pay reasonable salaries to shareholders. 2. Lease property from shareholders. 3. Defer or eliminate dividend payments. 4. Defer capital gains taxes on shares by making lifetime gifts of appreciated stock Solution 1. Corporations, limited liability companies (LLCs), general and limited partnerships, and sole proprietorships are the more common legal entities used for operating a business. 2.Corporations and LLCs offer owners limited liability. General partners and sole proprietors may be held personally responsible for the debts of the general partnership and sole proprietorship. However,limited partners are not responsible for the partnership’s liabilities. 3.A business entity may be legally classified as a corporation, limited liability company (LLC), a general partnership (GP), a limited partnership (LP), or a sole proprietorship under state law. However, for tax purposes a business entity can be classified as either a separate taxpaying entity or as a flow-through entity. Separate taxpaying entities pay tax on their own income. In contrast, flow-through entities generally don’t pay taxes because income fr.

1. Can't see the question
Solution
Can't see the question