Contract

Question

Olivia and Liam have heard complaints from fellow business owners about the tax burden they face due to their company’s business structure. What form of business ownership may involve double taxation?

(1 point)
Responses

Sole proprietorship
Sole proprietorship

Partnership
Partnership

Corporation
Corporation

S corporation

Answer 1

The form of business ownership that may involve double taxation is a Corporation. In a traditional C corporation, the company's profits are taxed at the corporate level, and then any dividends distributed to shareholders are taxed again at the individual level, leading to double taxation. S corporations, on the other hand, typically do not face double taxation as they pass income directly to shareholders who then report it on their personal tax returns.