Assume you plan to start a new enterprise; you know the probability of having losses for the first three years of operations is almost 90 percent, and you know you will report a substantial amount of income from other sources during those same three years.From a tax perspective, which of the following entity choices would not allow you to offset the entity losses against your income from other sources?
A)C corporation.
B)LLC.
C)General partnership.
D)S corporation.

Question

Quizplus · Accepted Answer

A C corporation does not allow for the offsetting of entity losses against income from other sources at the individual level. Losses can only be carried forward and used to offset future taxable income within the entity. The other entity choices (LLC, general partnership, and S corporation) all allow for the pass-through of losses to the individual owners, who can then offset the losses against income from other sources.

Assume You Plan to Start a New Enterprise; You Know