Which of the following is true of S corporations?

A) They are taxed twice.
B) They are very easy to form and operate.
C) They do not have any restrictions on the number of shareholders.
D) Their shareholders have unlimited liability.
E) Their shareholders can shift income and appreciation to others.

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Kassie Holzinger · Accepted Answer

Final Answer : E, Explanation :  S corporations allow shareholders to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders report the flow-through of income and losses on their personal tax returns and are taxed at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are subject to certain limitations, including restrictions on the number and type of shareholders they can have, and they require specific formalities and filings to be recognized. Shareholders enjoy limited liability, meaning they are not personally responsible for the business debts and liabilities of the corporation.

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Which of the following is true of S corporations?A) They are taxed twice.B) They are very easy to form and operate.C) They do not have any restrictions on the number of shareholders.D) Their shareholders have unlimited liability.E) Their shareholders can shift income and appreciation to others.

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