After-tax cash flow is minimized when a business operates as a passthrough entity rather than a taxable corporation.

Question

Quizplus · Accepted Answer

This statement is incorrect. After-tax cash flow can be impacted by multiple factors, including tax rates, deductions, and credits. Depending on the specifics of the situation, operating as a taxable corporation may result in a lower after-tax cash flow due to higher tax rates, while operating as a passthrough entity may result in a lower after-tax cash flow due to fewer deductions and credits available.

After-Tax Cash Flow Is Minimized When a Business Operates as a Passthrough