Business FinancesQuestion 1215 of 1605
A contractor's business is organized as an S corporation. A key financial feature of an S corp is that:
a.Profits and losses generally pass through to the owners' personal returns, avoiding corporate-level income tax
b.It is exempt from all California taxes
c.Business profits are taxed twice at the corporate and personal level
d.It pays the $800 minimum tax only in profitable years and never otherwise
Explanation
An S corporation is a pass-through entity: business income and losses flow to the shareholders' personal returns, avoiding the double taxation of a C corporation. (In California an S corp still pays a 1.5% state tax and the $800 minimum franchise tax.)
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