Ownership forms for pooled equity investment can differ in terms of how the entity's cash flows are distributed to its investors. Which of the following ownership structures requires cash flows to be allocated to each shareholder in proportion to his or her ownership of the entity, thereby preventing special allocations to multiple classes of investors?

Question

Quizplus · Accepted Answer

Subchapter S Corporations require that cash flows be allocated to each shareholder in proportion to their ownership of the entity. This structure does not allow for special allocations to multiple classes of investors, unlike partnerships and LLCs which can have more flexible distribution arrangements.

Ownership Forms for Pooled Equity Investment Can Differ in Terms