The answer is c. C Corporation
A sole proprietorship is a business owned and operated by a single individual. The profits from a sole proprietorship are not taxed at the business level. Instead, they are passed through to the owner's personal tax return and taxed at the individual level. Therefore, there is no double taxation.
An S Corporation is a special type of corporation that allows profits to be passed through directly to the owners' personal income without being subject to corporate tax rates. This means that the profits are only taxed once at the individual level, avoiding double taxation.
A C Corporation is a standard corporation where the profits are taxed at two levels. First, the corporation itself pays taxes on its profits at the corporate tax rate. Then, when these profits are distributed to shareholders in the form of dividends, the shareholders also pay taxes on these dividends at their individual tax rates. This results in double taxation.
A Limited Liability Company (LLC) is a flexible business structure that can choose how it wants to be taxed. By default, an LLC is taxed as a pass-through entity, meaning the profits are only taxed at the individual level, similar to a sole proprietorship or partnership. However, an LLC can elect to be taxed as a C Corporation, which would subject it to double taxation, but this is not the default or typical scenario.
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