Which of the following can be an advantage of a limited liability company over an S corporation? a. Double taxation of profits i

Question

3 years ago

10

Which of the following can be an advantage of a limited liability company over an S corporation? a. Double taxation of profits i

s avoided. b. Owners receive limited liability protection. c. Appreciated property can be distributed tax-free to an owner. d. Incentive stock options can be used to compensate owners.

Business

2 answers:

liraira [26] · Answer 1 · 2022-02-05T18:03:06+03:00

Answer:

C

Explanation:

Appreciated property can be distributed tax-free to an owner.

An S corporation cannot distribute appreciated property to its shareholders without gain. A limited liability company (LLC) is taxed like a partnership (an LLC properly structured and with two or more owners is taxed like a limited partnership with no general partners), a limited liability company can distribute appreciated property to its owners tax-free

Eduardwww [97] · Answer 2 · 2022-02-05T15:37:30+03:00

Answer:

The correct answer is letter "C": Appreciated property can be distributed tax-free to an owner.

Explanation:

A Limited Liability Company (<em>LLC</em>) is a type of organization where the owners are not personally liable for the company's responsibilities. On the other hand, an S Corporation is constituted for 100 shareholders or less who are jointly liable for the business' responsibilities.

An advantage of an LLC over an S Corporation could lay on the fact that the LLC can distribute appreciated property to its shareholders tax-free just like if an asset would have been sold.