Profits in a sole proprietorship are:
A)tax preferred
B)subject to double taxation
C)fully taxable
D)tax exempt - only owner draws are taxed

Question

Quizplus · Accepted Answer

Profits in a sole proprietorship are fully taxable. Since the business and the owner are considered the same entity, any profits made by the business are taxed as personal income for the owner. There is no distinction between the profits and the owner's personal income, and therefore there is no tax advantage or preference given to the profits. Additionally, there is no exemption for the owner's draws or any other form of income received from the business.

Profits in a Sole Proprietorship Are