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A) Congress repealed the limited liability protection of S corporations and limited them to companies with earnings of less than $3 million per year.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 allow firms great flexibility to choose the most advantageous tax treatment, and avoid the special eligibility requirements that characterize S corporations. In 1995 the National Conference of Commissioners on Uniform State Laws approved the final version of the Uniform Limited Liability Company Act. By 1996, all 50 states and the District of Columbia recognized LLCs. Today more than half of new business registrations in some states are LLCs.

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