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 taxes on dividends they receive after the company pays taxes on the money that is distributed
E)dividends are taxed at the capital gain rate

Question

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 taxes on dividends they receive after the company pays taxes on the money that is distributed
E)dividends are taxed at the capital gain rate

Quizplus · Accepted Answer

If an LLC is taxed like a partnership, this means that the company does not pay any taxes on its income. Instead, the income "passes through" to the owners, who report it on their personal tax returns and pay taxes on it at their individual tax rates. This is known as pass-through taxation, and it is a characteristic of both partnerships and some LLCs.

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