If a limited liability company (LLC) is taxed like a partnership, _____.
A) income passes through to the owners
B) income is taxed twice
C) the owners have unlimited tax liability
D) the shareholders pay tax on dividends received by them
E) dividends are taxed on capital gain rate

Question

Quizplus · Accepted Answer

When an LLC is taxed like a partnership, the company's income passes through to the owners, who report the income on their individual tax returns. This is known as pass-through taxation, and it is a common feature of partnerships and LLCs. The income is not taxed at the business level, which means that the business itself does not pay taxes on that income. Instead, the owners are responsible for paying taxes on their proportionate share of the income, based on their ownership percentage in the company.

If a Limited Liability Company (LLC) Is Taxed Like a Partnership