"Pass Through Tax Entity"

A Sole Proprietorship, Partnership, LLC (that has not made an election on Form 8832 to be taxed as a Corporation), or an S-Corporation in which corporate profits pass-through on the form K-1 to the owners on their personal income returns without a separate corporate tax. The entity avoids the double taxation of a C-Corporation in which the entity pays income tax on its profits and the owners also pay taxes on the dividends.

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