Sole proprietorships, partnerships and corporations are all taxable entities and incur a legal obligation for income taxes whenever income is earned.

Question

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Sole proprietorships and partnerships are not taxed as separate entities. Instead, their income is passed through to the owners or partners who then report the income on their personal tax returns. Corporations, however, are taxed as separate entities and incur a legal obligation for income taxes on their earnings.

Sole Proprietorships, Partnerships and Corporations Are All Taxable Entities and Incur