Different types of entitiessuch as individuals, partnerships, Subchapter S corporations, not-for-profits, and corporationsin the federal income tax system are split into two distinct groups: taxpaying entities and flow-through entities. Taxpaying entities must pay income taxes on their taxable income; however, flow-through entities can limit taxation by transferring their income (flowing through) to a taxpaying entity such as an owner and/or an investor. In both cases, income must still be calculated for the purpose of eventual taxation. Select one of the following entities: individuals, partnerships, Subchapter S corporations, not-for-profits, or corporations. Consider the following questions: How do taxpaying and flow-through entities compute income? What is the definition of income by the IRS?