An owner should choose an S-corporation form of ownership when he/she:
A)has an established company that is suffering losses due to double taxation.
B)is starting up a company and anticipating either net losses or high profits with large dividends.
C)owns a company in which net profits before any compensation to shareholders are less than $100,000 per year.
D)has an existing sole proprietorship and wants to lower the tax bill through deducting fringe benefits as business expenses.

Question

Quizplus · Accepted Answer

An S-corporation allows profits and losses to pass through to the owner's personal tax return, avoiding double taxation. This is beneficial for a startup anticipating losses or high profits, as it can reduce the overall tax burden.

An Owner Should Choose an S-Corporation Form of Ownership When