Memphis is the owner of a car performance tuning business. As a sole proprietor, any profit he earns is:
A)taxed as the earnings of a sole proprietorship as a business.
B)treated as Memphis's personal income.
C)not subjected to any tax.
D)taxed only when he withdraws the money from a bank.

Question

Quizplus · Accepted Answer

As a sole proprietor, Memphis and his business are considered the same for tax purposes. Any profit earned by the business is treated as Memphis's personal income and is taxed accordingly. Therefore, option B is correct. Options A, C, and D are incorrect since they do not accurately reflect how a sole proprietorship is taxed.

Memphis Is the Owner of a Car Performance Tuning Business