2.Three creative brothers have developed an idea for an innovative product. They have found 20 investors who support their business plan. These 20 investors however are disinterested in being involved in the day to day operations of the business, and also do not want to commit anything more than their initial investment to the project. The nature of the product which is being developed creates some potential for significant liability to the business entity. Consequently, the three creative brothers are looking for some insulation from losses in excess of their initial investment. The parties also wish to avoid the income of the business being taxed, and then being taxed a second time upon distribution to the investors. What form of business structure best reflects the needs of the people involved here?

A.A corporation. A corporation would provide the investors and the three brothers with a limitation on liability based on their initial investments.

B.A general partnership. A general partnership will provide all of the parties the protection regarding liability they desire. In addition, it will avoid the double taxation which occurs in the general corporate structure.

C.A sub chapter S corporation. A sub chapter S corporation will provide all of the liability protections of a corporate structure, and will also provide taxation in the form of a partnership so as to avoid double taxation. A sub chapter S corporation will work in this situation if the parties meet the requirements and limitations of state law regarding a sub chapter S corporation.

D.A limited partnership. By forming a limited partnership, the parties would protect the 20 investors from any liability over their initial investment. This would also avoid issues of taxation related to the corporate structure.