The S corporation is likely to be less popular in the future because:
A)Congress repealed the limited liability protection of S corporations and limited them to companies with earnings of less than $3 million per year.
B)Limited liability companies,which do not have the restrictive eligibility requirements of S corporations and offer greater flexibility in the choice of tax treatment,are now legal in all 50 states.
C)Many states significantly increased the annual fee that S corporations must pay to maintain their tax status,thus eliminating the financial advantages of this form of ownership.
D)S corporations have been made illegal in several states as a reaction to widespread abuse of the special benefits available to this type of business.

Question

Quizplus · Accepted Answer

Limited liability companies (LLCs) offer many of the benefits of S corporations, such as pass-through taxation, while remaining much more flexible in terms of eligibility criteria and tax treatment. This suggests that LLCs will become increasingly popular and may ultimately displace S corporations as the preferred form of ownership for small businesses. None of the other options listed are accurate - S corporations still enjoy limited liability protection and have not been made illegal in any states, and while some states have increased fees for S corporations, this is unlikely to be the primary reason for declining popularity.

The S Corporation Is Likely to Be Less Popular in the Future