Registered Tax Return Preparer RTRP Practice Exam

Question: 1 / 400

Which of the following does NOT qualify for the business income deduction?

Sole proprietorships

C Corporations

The business income deduction allows qualifying businesses to reduce their taxable income, enhancing the potential for tax savings. C Corporations do not qualify for this specific deduction, as the business income deduction is primarily associated with pass-through entities like sole proprietorships, S Corporations, and self-employed individuals.

In the case of C Corporations, the income is taxed at the corporate level, and any distributions to shareholders are taxed again at the individual level. This double taxation structure differs significantly from pass-through entities where the income passes directly to the owners or shareholders and is taxed only at their individual income tax rates. Consequently, the business income deduction, which aims to lower the taxable income for these pass-through entities, is not available to C Corporations.

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Self-employed individuals

S Corporations

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