1. Compare the basic tax and nontax factors of doing business as a partnership, S corporation and C Corporation. Circle the correct answers. (18 points)

	Partnership	S corporation	C corporation
Who pays tax on the entity's income?	Partners Partnerships	Shareholders S corporation	Shareholders C corporation
Are operating losses passed through to owners?	Yes No	Yes No	Yes No
Are capital gains (losses) reported on owners' tax returns as such?	Yes No	Yes No	Yes No
Are distributions of profits taxable to owners?	Yes No	Yes No	Yes No
Is the liability of owners limited?	Yes No	Yes No	Yes No
Is there free transferability of ownership interests?	Yes No	Yes No	Yes No