Question

To raise capital, Candace Tyson and Martha Black plan to sell stock to between 108 and 200 investors. They also want to avoid double taxation. Which type of business ownership would you recommend?
A) Regular corporation.
B) S-corporation.
C) Cooperative.
D) Limited-liability company.
E) Limited partnership.

Answer 1

Answer:

The correct answer is A) Regular corporation or C corporation

Explanation:

Because Candance and Martha want to sell shares, they have to form a corporation, be it a C Corporation or an S Corporation, however, they also want to avoid double taxation, therefore, they have to form a C Corporation.

A C Corporation or Regular Corporation is taxed on the income it makes, and nothing else, the profit after deducting taxes is not taxed again. A S Corporation, on the other hand, is taxed both on income and profit.