Question

which corporation uses a double - layer of taxation?
s corporation
c corporation
sole proprietorship
limited liability company

Explanation:

• S corporation: It is a pass - through entity. Shareholders report corporate income, losses, deductions, and credits on their personal tax returns. So, it does not have double - layer taxation.
• C corporation: The corporation is taxed on its profits at the corporate level. Then, when dividends are distributed to shareholders, the shareholders are taxed on those dividends at the individual level. This is double - layer taxation.
• Sole proprietorship: The business income is reported on the owner's personal tax return. There is no separate business - level tax. So, no double - layer taxation.
• Limited Liability Company (LLC): By default, for tax purposes, a single - member LLC is taxed like a sole proprietorship (income on owner's return), and a multi - member LLC is taxed like a partnership (pass - through to partners' returns). So, no double - layer taxation.

Answer:

B. C corporation