Hudson and Ilsa want to market a new line of kayaks and related gear under the brand name Journeys as a corporation-Journeys Inc. To avoid income taxes at the corporate level, they should form

Question

Hudson and Ilsa want to market a new line of kayaks and related gear under the brand name Journeys as a corporation-Journeys Inc. To avoid income taxes at the corporate level, they should form​

Quizplus · Accepted Answer

Forming an S corporation would allow Hudson and Ilsa to avoid income taxes at the corporate level. S corporations are pass-through entities where the profits and losses are passed on to the shareholders and reported on their individual tax returns, avoiding double taxation. This would allow Journeys Inc. to maintain limited liability protection while also avoiding corporate income taxes. Options A, B, and D are not relevant to the situation.

Hudson and Ilsa Want to Market a New Line of Kayaks