Two of the major advantages of a pass-through entity are that investors can assume the tax deductions and losses earnings.
An option to lower taxable income is a tax deduction. A standard deduction is a single, predetermined deduction. Higher-income taxpayers frequently have considerable deductible expenses, such as state and local taxes paid, mortgage interest, and charitable contributions, which is why itemized deductions are popular.
Any expense that is deemed "ordinary, necessary, and reasonable" and aids in the revenue generation of a firm is tax deductible. Usually, it is subtracted from the business's income before taxes.
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