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Homework answers / question archive / To avoid double taxation, an entrepreneur may elect to organize as a/an
To avoid double taxation, an entrepreneur may elect to organize as a/an .
Answer: Sole proprietorship, partnership, or Limited Liability Company (LLC) taxed as a s corporation
Explanation:
Double taxation occurs when the profits of the business are taxed on the business level and on the individual level through the owners tax returns. Pass through entities are not taxed at the corporate level but instead any profit earned by the business is passed through to the individual owners taxed return and taxed at that time. A corporation taxed as a C corporation will incur double taxation. Sole proprietorships, partnerships, and LLCs are business entities in which the profit earned is passed to the individual tax return and does not face double taxation.