The correct answer is D. Sole proprietorships and partnerships generally have a tax advantage over many corporations, especially large ones. This is because personal income tax is paid by sole proprietorship and partnerships but not corporate income tax. Sole proprietorship enjoy tax advantage when their business is not doing well by having tax bracket that is low when profits are low whereas partnerships enjoy tax advantage when income is low or they experience losses of money shares of the partnership are included by partners in their individual tax returns.

A. One of the disadvantages of incorporating a business is that the owners then become subject to liabilities in the event the firm goes bankrupt. A corporation is a legal business that is separate from its owners hence the owners are not subject to liabilities in the event the firm goes bankrupt.

B. Sole proprietorships are subject to more regulations than corporations. Sole proprietorship are easy to set up and the least costly among the various form of business ownership hence its subject to less regulations than corporations.

C. In any type of partnership, every partner has the same rights, privileges, and liability exposure as every other partner. This is not true as it depends on the percentage of ownership that one has in the partnership.

E. Corporations of all types are subject to the corporate income tax. This is not true as it depends on the type of corporation.