TN Business And Law Practice Questions - Tennessee Contractor Business And Law Examination Exam

Why do many small Tennessee contractors elect S corporation or LLC tax treatment instead of remaining a C corporation?

C corporations are prohibited from holding a Board contractor license A C corporation's profits are generally taxed at the entity level and again when distributed as dividends Only C corporations must obtain a federal employer identification number S corporations and LLCs are exempt from Tennessee business tax

Correct Answer:

A C corporation's profits are generally taxed at the entity level and again when distributed as dividends

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